Hill-Rom Holdings obtains new $1 billion term loan A, $1.2 billion revolving facility

By Sarah Lizee

Olympia, Wash., Aug. 30 – Hill-Rom Holdings, Inc. entered into a senior credit agreement on Friday with JPMorgan Chase Bank, NA as administrative agent for a new $1 billion senior secured term loan A facility and a new $1.2 billion senior secured revolver, according to an 8-K filing with the Securities and Exchange Commission.

JPMorgan, BofA Securities, Inc., Citizens Bank, NA, MUFG Bank, Ltd., PNC Capital Markets LLC and Wells Fargo Securities, LLC are joint bookrunners and joint lead arrangers. Bank of Nova Scotia and Fifth Third Bank are co-syndication agents. Capital One, NA, Goldman Sachs Bank USA, TD Bank, NA and Citibank, NA are co-documentation agents.

Loans bear interest at Libor plus 125 basis points to 175 bps, based on first-lien net leverage ratio. The commitment fee ranges from 17.5 bps to 30 bps and is also based on first-lien net leverage ratio.

Interest is initially Libor plus 130 bps, and the commitment fee is 20 bps.

Proceeds were used to pay off existing borrowings under the company’s amended and restated senior credit agreement dated Sept. 21, 2016, which included a $1,462,500,000 senior secured term loan A facility, of which about $938.4 million in principal amount remained outstanding on the closing date, and $700 million senior secured revolver.

For the term loan, the company is required to make scheduled quarterly payments, with the balance due on the fifth anniversary of the closing date. Amortization is 5% in years one through three, 7.5% in year four and 10% in year five.

The revolver will mature five years after the closing date.

The new credit agreement requires the company to comply with two financial covenants, (i) a total secured debt net leverage ratio test of 3.00 to 1.00 and (ii) a minimum interest coverage ratio test of 4.00 to 1.00, in each case tested as of the last day of each fiscal quarter; provided that, with respect to the total secured debt net leverage ratio test, the borrower may increase the maximum ratio by 0.50 to 1.00 for four consecutive fiscal quarters in connection with some permitted acquisitions.

The company has the right at any time to request incremental term and/or revolving commitments up to $600 million, plus all voluntary prepayments of the term loan facility (to the extent not funded with the proceeds of long-term debt), plus an unlimited additional amount so long as such amount at such time could be incurred without causing the pro forma first-lien net leverage ratio to exceed 3.00 to 1.00.

Hill-Rom is a Chicago-based medical technology company.

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