What are the key changes to Boston Scientific's credit agreement?

The credit agreement was amended to provide greater flexibility by excluding substantial amounts related to restructuring charges (up to $346 million) and litigation settlements from the calculation of consolidated EBITDA until April 2011. This relief supports the company's operational initiatives and expense reductions.

How did the company's debt position change?

Boston Scientific prepaid $500 million of its term loan and reduced its revolving credit facility by $250 million. This deleveraging action pushed the next significant debt maturity to April 2010, with a principal amount of $325 million.

Were there any adjustments to previously reported Q4 2008 financial results?

Yes, the company announced updated Q4 2008 results. This included a $23 million pre-tax charge for a patent litigation settlement and a $54 million credit that revised the total goodwill impairment charge downwards to $2.613 billion from the previously stated $2.667 billion.

What are the implications of the increased interest rates and fees?

The interest rate on term loan borrowings increased from LIBOR plus 1.00% to LIBOR plus 1.75% at current credit ratings, and the fee on unused facilities rose from 0.175% to 0.500%. These changes will increase the cost of borrowing and commitment fees for the company.

BSX 8-K: Earnings & Results & Material Agreements

Summary

Boston Scientific Corporation (BSX) filed an 8-K on February 26, 2009, detailing significant financial covenant amendments to its credit agreement and providing updated financial results for the fourth quarter of 2008. The company amended its term loan and revolving credit facility to enhance financial flexibility, particularly in light of ongoing restructuring and expense reduction initiatives. Key changes include exclusions for up to $346 million in restructuring charges and substantial amounts related to litigation settlements from EBITDA calculations through April 2011, providing crucial breathing room for operational adjustments. Concurrently, BSX announced updated Q4 2008 results, including a $23 million pre-tax charge for a patent litigation settlement and a $54 million credit that reduced its previously announced goodwill impairment charge from $2.667 billion to $2.613 billion. The company also took actions to de-lever, prepaying $500 million of its term loan and reducing its revolving credit facility by $250 million, thereby pushing its next significant debt maturity to April 2010. While these adjustments aim to support strategic initiatives, investors should note the increase in interest rates on term loan borrowings and fees on unused facilities.

Key Highlights

1Amended credit agreement to increase flexibility for restructuring and expense reduction initiatives through April 2011.
2Secured significant covenant relief by excluding up to $346 million in restructuring charges and substantial litigation-related payments from EBITDA calculations.
3Prepaid $500 million of term loan and reduced revolving credit facility by $250 million, reducing overall debt and extending the next maturity to April 2010.
4Announced updated Q4 2008 results, including a $23 million pre-tax charge for a patent litigation settlement.
5Reported a $54 million credit that reduced the Q4 2008 goodwill impairment charge to $2.613 billion from the previously announced $2.667 billion.
6Increased interest rates on term loan borrowings (LIBOR + 1.75% from LIBOR + 1.00%) and fees on unused facilities (0.500% from 0.175%).

BOSTON SCIENTIFIC CORP 8-K Report, Material Agreement (Feb 26, 2009)

Summary

Key Highlights

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