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Avanos Medical gets $125 million incremental term loans to fund merger
By Rebecca Melvin
Concord, N.H., Jan. 21 – Avanos Medical, Inc. incurred $125 million of incremental term loans, supplementing its existing senior secured credit facility, which was amended to adjust the benchmark setting. Both transactions occurred on Dec. 22 and are tied to the company’s previously announced merger agreement, according to an 8-K filed with the Securities and Exchange Commission.
Avanos paid $130 million in cash for the OrthogenRx Inc. merger, which closed on Thursday. There is up to an additional $30 million payable in contingent cash consideration based on OrthogenRx’s growth in net sales during 2022 and 2023. The purchase price was funded by available cash on hand and the proceeds of borrowings, including the new incremental tranche A term loans, under the company’s existing senior secured credit facility.
The tranche A term loans mature on Oct. 30, 2023. They can be prepaid under the existing agreement at the rates of its existing revolving credit facility, or SOFR plus 150 basis points to 225 bps, depending on the company’s consolidated total leverage ratio.
Citigroup NA is administrative agent, and J.P. Morgan Chase Bank NA and MUFG Bank Ltd. are joint lead arrangers of the new loans. ING Capital LLC, Morgan Stanley Bank NA, U.S. Bank NA and Royal Bank of Canada are also tranche A term loan lenders.
Citigroup is also the administrative agent and collateral agent of the restated credit agreement dated as of Oct. 20, 2018 and amended Dec. 22. Deutsche Bank Securities Inc., JPMorgan, Morgan Stanley Senior Funding Inc. and RBC Capital Markets are joint lead arrangers of the facility and BMO Capital Markets, ING, MUFG and U.S. Bank are co-arrangers.
Avanos Medical is a medical device company based in Alpharetta, Ga.
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