Entellus Medical entered into a loan and security agreement with Oxford Finance, as collateral agent and lender, under which Entellus may borrow up to $40 million in term loans in three tranches and up to $10 million under revolving line of credit.
Under the terms and conditions of the loan agreement, the company may borrow up to a total of $40 million in term loans in three tranches and up to $10 million under a revolving line of credit, subject to a borrowing base requirement.
The first term loan of up to $13.5 million was borrowed immediately by the company and a portion of which was to repay approximately $20 million in outstanding indebtedness. The company also immediately borrowed $8 million under the line of credit to repay an existing $20 million in outstanding indebtedness, with the ability to borrow up to an additional $2 million if the borrowing base requirement is met in the future.
The second term loan of up to $10 million is available beginning on the earlier of the completion of a future merger, consolidation or acquisition in which the borrowings would be used by the company to pay the purchase price or November 1, 2017 (if certain trailing 12-month revenues are met) and ending on December 31, 2017.
The third term loan of up to $16.5 million is available beginning on the earlier of the completion of a future merger, consolidation or acquisition in which the borrowings would be used by the company to pay the purchase price or the occurrence of certain trailing 12-month revenues and ending on March 31, 2018.
The borrowings under the second and third term loans must be used to fund a merger, consolidation or acquisition or may be used for working capital so long as the company’s trailing 12-month revenues meet certain amounts. The third term loan cannot be made prior to the funding of the second term loan, or if no second term loan is made, January 1, 2018. The term loans mature and all amounts borrowed under the loan agreement, including the line of credit, become due and payable on March 1, 2022.