AngioDynamics to pay down credit facility voluntarily from cash flow

By Devika Patel

Knoxville, Tenn., Jan. 6 – AngioDynamics Inc. plans to continue to generate excess cash flow and use the money to repay debt voluntarily.

“We announced the new credit facility and a share buyback program, which will help to further strengthen our capital structure and give more flexibility to capitalize on future growth initiatives,” president and chief executive officer James C. Clemmer said on the company’s fiscal second quarter earnings call on Friday.

“Our strong cash flow performance during the second quarter was ahead our expectations.

“We generated $14.9 million in operating cash flow and $13.6 million in free cash flow,” Clemmer added.

The company said in a 10-Q that it believes that its current cash and investment balances, together with cash generated from operations and its remaining revolving credit facility capacity of $134 million as of Nov. 30, 2016, will provide sufficient liquidity to meet the company’s anticipated needs for capital for at least the next 12 months.

“Under the terms of the new credit facility, we retired all existing loans and terminated all existing commitments relating to our previous credit facilities,” vice president and interim chief financial officer Michael Trimarchi said on the call.

“During and after the second quarter, we made required as well as voluntary debt payments, which currently leave us with approximately $5 million outstanding on the revolver as of today.

“Based on current cash projections, we currently anticipate making an additional voluntary payment during the third quarter to pay down the remaining revolver amount outstanding.

“Given our EBITDA projections for the year, this will position us to exit fiscal year 2017 with a debt covenant ratio of 1.5x, Trimarchi added on the call.

Loans

On Nov. 10, AngioDynamics negotiated a credit agreement for a $100 million senior secured term loan facility and a $150 million senior secured revolving credit facility.

The five-year revolver includes an up to $20 million sublimit for letters of credit and a $5 million sublimit for swingline loans, and carries a commitment fee of 22.5 bps to 35 bps.

Interest on both the revolver and the term loan is Libor plus a margin based on AngioDynamics’ total leverage ratio. The margin ranges from 150 basis points to 225 bps.

The credit agreement includes two financial covenants. The company is required to maintain, as of the end of each of its fiscal quarters, a ratio of (a) consolidated EBITDA minus consolidated capital expenditures to (b) consolidated interest expense paid or payable in cash plus scheduled principal payments for debt under the credit agreement of not less than 1.25 to 1.00. The company must also maintain, as of the end of each of its fiscal quarters, a ratio of consolidated total indebtedness to consolidated EBITDA of not greater than 3.50 to 1.00; during certain periods following material acquisitions, that ratio may be increased to 3.75 to 1.00.

The term loan is subject to quarterly amortization at an annual rate of 5% for years one through three, 10% in year four and 12.5% in year five, with the balance due at maturity.

JPMorgan Chase Bank, NA was the administrative agent, with Bank of America, NA and Keybank NA as co-syndication agents and JPMorgan Chase Bank, Merrill Lynch, Pierce, Fenner & Smith Inc. and Keybank as joint bookrunners and joint lead arrangers.

At closing, AngioDynamics borrowed $100 million under the term loan and about $16.5 million under the revolver.

Proceeds of the term loan and a portion of the proceeds of the revolver were used to repay in full AngioDynamics’ credit agreement dated Sept. 19, 2013. Remaining revolver proceeds may be used to refinance other existing debt, to finance working capital needs and for general corporate purposes.

AngioDynamics is a Latham, N.Y.-based provider of medical devices for vascular access, surgery, peripheral vascular disease and oncology.

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