Theratechnologies, a biopharmaceutical company focused on the development and commercialization of innovative therapies, closed on a $40 million three-year non-dilutive, senior secured syndicated financing with TD Bank as agent._x000D_
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The new credit facilities include a $20 million accordion feature, which could expand total commitments up to $60 million. Investissement Québec (IQ), the company’s largest shareholder, has also agreed to provide a $15 million second ranking secured subordinated term loan. Net proceeds from the new loans together with cash on hand will be used to repay all obligations including prepayment penalties under the company’s existing facility with affiliates of Marathon Asset Management pursuant to the credit agreement entered into with Marathon in July 2022, and to fund business development activities. All amounts are in U.S. dollars unless otherwise stated._x000D_
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“This transaction represents a critical milestone for the company’s strategic focus on the commercialization of innovative therapies through business development deals and partnerships,” Philippe Dubuc, senior vice president and chief financial officer at Theratechnologies, said. “The new facility’s favorable rates and terms provide us with meaningful financial flexibility to execute on our acquisition strategy at substantially lower costs. The flexible structure fully aligns with our strategic objectives of continuing to enhance profitability and strengthen our balance sheet to fuel long-term growth and sustainability.”_x000D_
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Key highlights of the TD Bank Financing include:_x000D_
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- $25 million senior secured term loan and a $15 million senior secured revolving facility; each with interest on a floating rate (SOFR) plus a margin based on the company’s total net debt-to-Adjusted EBITDA ratio.
- At closing, the interest rate will be SOFR plus 2.75%. This rate compares favorably to the company’s previous credit facility, which carried an interest rate of SOFR + 9.50%.
- The TD Bank term loan will be amortized over a seven-year period, and will mature on Nov. 27, 2027._x000D_
The company has drawn $5 million on the revolving facility.
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Key highlights of the IQ subordinated loan include:_x000D_
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- A $15 million second ranking secured subordinated term loan with interest based on U.S. government rates plus a margin based on the company’s total net debt-to-adjusted EBITDA ratio.
- The interest rate is currently set at U.S. government rates plus 7.23%, or 11.45%.
- The loan will be interest-only and be subject to full repayment after 42 months.
- After giving effect to the financing, the company will have $45 million in debt, with an estimated cash balance as at Nov. 30, 2024 of approximately $20 million, for a net debt position of approximately $25 million.
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