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BOSTON SCIENTIFIC CORP 8-K Report, Material Agreement (Aug 7, 2017)

Filed August 7, 2017For Securities:BSX

Summary

Boston Scientific Corporation (BSX) has announced the execution of a new $2.25 billion senior unsecured credit facility, referred to as the "2017 Credit Agreement," effective August 4, 2017. This new facility replaces the Company's prior credit agreement from April 2015. The 2017 Credit Agreement provides significant borrowing capacity and a maturity date of August 4, 2022, with potential one-year extensions, offering financial flexibility for the company's operations and strategic initiatives. The refinancing was accompanied by the termination of the previous credit facility. The terms of the new agreement maintain similar interest rates and facility fees compared to the prior agreement, suggesting no immediate change in borrowing costs. A key feature for investors is the inclusion of covenants, most notably a maximum leverage ratio of 3.50x (Consolidated EBITDA basis), with a temporarily elevated ratio of 4.50x allowed following a Qualified Acquisition (>$1 billion), providing headroom for strategic M&A activity.

Key Highlights

  • 1Boston Scientific entered into a new $2.25 billion senior unsecured credit facility (2017 Credit Agreement) on August 4, 2017.
  • 2The new credit facility replaces the previous credit agreement dated April 10, 2015.
  • 3The 2017 Credit Agreement matures on August 4, 2022, with options for one-year extensions.
  • 4The facility allows for borrowing up to $2.25 billion in revolving credit loans.
  • 5Interest rates and facility fees on the new agreement are comparable to the previous facility.
  • 6Key covenant requires maintaining a maximum leverage ratio of 3.50x (Consolidated EBITDA).
  • 7A higher leverage ratio of up to 4.50x is permitted for a limited period following a "Qualified Acquisition" exceeding $1 billion.

Frequently Asked Questions

This filing announces Boston Scientific's entry into a new $2.25 billion senior unsecured credit facility, which refinances their existing credit line and provides ongoing financial flexibility.

The new facility replaces an older one, effectively extending and consolidating the company's access to revolving credit. The terms regarding interest rates and fees are similar, suggesting no immediate significant change in borrowing costs or debt structure due to this refinancing.

The most significant covenant requires Boston Scientific to maintain a maximum leverage ratio of 3.50x, calculated based on Consolidated EBITDA. Importantly, this ratio can temporarily increase to 4.50x following a substantial acquisition (over $1 billion), offering flexibility for strategic growth.

The 2017 Credit Agreement has a maturity date of August 4, 2022, with the possibility of one-year extensions, subject to certain conditions and lender approvals.