MiMedx Group, an advanced wound care and an emerging therapeutic biologics company, closed concurrent $150 million private equity and debt financings, consisting of an equity financing pursuant to a securities purchase agreement with an entity controlled by EW Healthcare Partners and certain funds managed by Hayfin Capital Management, and a debt financing pursuant to a loan agreement with Hayfin Capital Management.
Under the loan agreement, Hayfin is providing MiMedx with a five-year term loan facility in the aggregate principal amount of $50 million, the full amount of which is being borrowed and funded, and a one-year, delayed draw term loan facility in the aggregate principal amount of $25 million, which is not currently being drawn or funded. The facilities bear interest at a rate equal to LIBOR (subject to a floor of 1.5%) plus a margin of 6.75%. The margin will be eligible to decrease to 6.5% or 6% after Dec. 31, 2020, based on future total net leverage levels. The loan agreement does not include any equity or equity-linked component.
Under the securities purchase agreement, MiMedx is issuing shares of a newly created series B convertible preferred stock for an aggregate purchase price of $100 million (the equity investment), with $90 million being made by an entity controlled by EW Healthcare Partners and $10 million being made by Hayfin. The series B convertible preferred stock, together with any accrued and unpaid dividends thereon, may be converted into company common stock at any time at a conversion price of $3.85 per share of company common stock. The series B convertible preferred stock carries a cumulative annual dividend of 4% for the first 12 months following the closing and 6% thereafter.
The aggregate proceeds of the equity investment and the term loan facility have been or will be used (i) to repay the outstanding principal, interest and prepayment premium resulting from the early termination of MiMedx’s term loan agreement with Blue Torch Finance, (ii) for working capital and general corporate purposes, and (iii) to pay transaction fees, costs and expenses incurred in connection with the equity investment, the term loan facility and the related transactions.
As part of these transactions, EW Healthcare Partners designated Martin P. Sutter and William A. Hawkins III to serve on MiMedx’s board as preferred directors.
“Obtaining this critical financing is a clear turning point for the company,” Timothy R. Wright, CEO of MiMedx, said. “The additional resources provide us with the ability to strengthen areas critical to stabilizing the business, prioritize investments that enhance our research & development, manufacturing, and commercial organizations, and pursue the attractive growth opportunities afforded by the company’s amniotic tissue products and know-how. Moreover, the affirmation of the strength of our new leadership team and future prospects from one of the nation’s top healthcare-specific investors is a meaningful endorsement of the company’s progress and efforts to return to the patient-centered mission of innovation that helps people heal.”
“This transaction marks the culmination of an extensive review of potential financing alternatives by the board, in consultation with the company’s advisors, which included a leading investment bank with in-depth, industry-specific expertise,” M. Kathleen Behrens, PhD, chair of the MiMedx board of directors, said. “A new leadership team, new board members, and now the opportunity to welcome these accomplished and well-regarded leaders to our board of directors, each demonstrate great progress toward transforming and positioning the company for the future.”
“EW Healthcare Partners is delighted to become a significant shareholder in MiMedx,” Sutter, who is co-founder and a managing director of EW Healthcare Partners, said. “We are very impressed with the entire senior management team and board of directors, and the tremendous work they are doing to transform the company. We are aligned with the company’s vision and look forward to assisting the team in regaining its leadership position in the attractive and growing advanced wound care space.”
“The new management team and board members have made great progress in transforming the enterprise and positioning the company for continued success,” Hawkins III, who is a senior advisor to EW Healthcare Partners, said. “MiMedx has long been a leader in bringing forth innovative solutions for the advanced wound care market, and I look forward to partnering with Tim Wright and the entire management team to support the company’s growth and strategic priorities to improve patient care.”
J.P. Morgan is acting as sole placement agent and Sidley Austin is serving as legal counsel to MiMedx.
EW Healthcare Partners is a private healthcare investment firm.
Hayfin Capital Management is a European alternative asset management firm with approximately €15 billion ($16.97 billion) of assets under management.
