LivaNova, a medical technology company, retired its $450 million five-year senior secured term loan. To retire the term loan, LivaNova repaid the $450 million principal amount outstanding plus accrued interest and an approximately $35.6 million make-whole premium (including $28.8 million, which is the present value of interest through Jun. 17, 2022, and a $6.8 million termination fee). The repayment was funded by proceeds from an underwritten offering of ordinary shares that closed on Aug. 6, 2021, (including the full exercise of the underwriters’ option) and cash on hand. Early retirement of the term loan, which bore interest on a floating-rate basis, will result in reduced interest expense of approximately $39 million on an annualized basis (based on currently prevailing rates), including approximately $5 million of amortization of debt issuance costs.
In addition, LivaNova executed a $125 million secured revolving credit facility with Goldman Sachs Bank as agent and Goldman Sachs Bank, Barclays Bank and UBS as lenders. The credit facility will be available for general corporate purposes.
After giving effect to retirement of the term loan and completion of the equity offering, LivaNova now expects full-year 2021 adjusted diluted earnings per share from continuing operations to be in the range of $1.75 to $2.05 and full-year 2021 adjusted free cash flow to be in the range of $50 to $70 million. These metrics exclude the impact of the $35.6 million make-whole premium.
“The successful completion of these transactions represents a significant step toward enhancing our liquidity position, provides improved terms and conditions and creates financial flexibility,” Alex Shvartsburg, CFO of LivaNova, said.
The credit facility has a five-year term and bears interest at a rate equal to, for U.S. dollar-denominated loans, an adjusted London Interbank Offered Rate (LIBOR) with a floor of 0.00% or a base rate determined under the terms of the credit facility plus, in each case, a variable margin based on LivaNova’s senior secured net leverage ratio. As of the effective date of the credit facility (Aug. 13, 2021), the applicable margin was equal to 3% per annum. Interest will be paid monthly or quarterly, as selected by the borrower, with any outstanding principal due at maturity. The credit facility also contemplates the payment of commitment fees on the unused portion of the commitments at a variable percentage based on LivaNova’s senior secured net leverage ratio. As of the effective date of the credit facility, the applicable commitment fee percentage was equal to 0.25% per annum. The credit facility, if drawn, can be repaid at any time without premium or penalty.
