Endologix entered into an agreement with Deerfield Management, a healthcare investment organization, to receive up to $170 million in funding through a $120 million six-year secured term loan and a $50 million three-year secured asset-based revolving line of credit.

Under the term loan, Deerfield provided Endologix with $120 million of gross proceeds in funding. Endologix has agreed to pay Deerfield a yield enhancement payment equal to 2.25% of the principal amount at the time of funding. The outstanding principal accrues interest until maturity on April 2, 2023 at a rate of 6.87% per annum, payable quarterly in arrears commencing on July 1, 2017 and on the first business day of each calendar quarter thereafter, unless repaid earlier.

In addition, on each of April 2, 2021, April 2, 2022 and the maturity date, Endologix must make an amortization payment equal to $40 million (or, if on the maturity date, the remaining outstanding amount of the term loan). Endologix may, at its option, repay the term loan at any time. Any prepayment prior to April 2, 2021 will require a make-whole payment and any prepayment made on or after April 2, 2021 may be made without premium or penalty (unless in connection with a change in control of Endologix).

Endologix estimates that the net proceeds from the term loan will be $113 million, after deducting estimated transaction expenses. Endologix intends to use approximately $52.5 million of the net proceeds from the term loan to repurchase $53.1 million aggregate principal amount of outstanding 2.25% convertible senior notes due 2018, plus the accrued but unpaid interest thereon, from the holders thereof in privately negotiated transactions. These note repurchases are expected to settle on April 10, 2017. The company also intends to enter into an unwind agreement with Bank of America to unwind a portion of the capped call transactions in respect of the notes to be repurchased. Endologix intends to use the remainder of the net proceeds from the term loan for working capital and general corporate purposes.

Under the terms of the revolving line of credit, Endologix may borrow up to the lesser of $50 million or its applicable borrowing base from time to time. Any outstanding principal under the revolving line of credit will accrue interest at a rate equal to the LIBOR + 4.60%. Endologix is subject to other fees in addition to interest on outstanding principal under the revolving line of credit. This revolving line of credit will replace Endologix’s $50 million asset-based revolving line of credit with MidCap Financial Trust.

Perella Weinberg Partners and J. Wood Capital Advisors served as financial advisors to Endologix in connection with this credit facility.

Irvine, CA-base Endologix develops and manufactures minimally invasive treatments for aortic disorders.

Deerfield is an investment management firm committed to advancing healthcare through investment, information and philanthropy.