Summary
Vertex Pharmaceuticals Inc. (VRTX) has filed an 8-K report detailing the execution of a new Credit Agreement on October 13, 2016, replacing its prior facility. This new agreement establishes a $500 million revolving credit facility, with $300 million drawn at inception. The primary purpose of this initial borrowing was to refinance existing debt under the previous Macquarie Agreement, which has now been terminated and fully repaid. The new facility has a maturity date of October 13, 2021, and allows for a potential increase in borrowing capacity by an additional $300 million, subject to certain conditions. The loans bear interest at variable rates (base rate or Eurodollar rate) plus an applicable margin, which is tied to the company's consolidated leverage ratio. The agreement includes customary covenants and events of default, with financial covenants requiring a consolidated leverage ratio of no more than 3.00 to 1.00 and consolidated EBITDA of at least $200 million, measured quarterly.
Key Highlights
- 1Entered into a new $500 million revolving credit facility with Bank of America, N.A. on October 13, 2016.
- 2$300 million was drawn at the closing of the new credit facility.
- 3The proceeds from the initial borrowing were used to refinance and terminate the company's previous credit agreement with Macquarie.
- 4The new credit facility matures on October 13, 2021.
- 5The company has the option to increase the borrowing capacity by an additional $300 million, subject to certain conditions.
- 6The credit agreement includes financial covenants, such as maintaining a consolidated leverage ratio of no more than 3.00:1.00 and consolidated EBITDA of at least $200 million quarterly.
- 7The new facility is secured by substantially all of the company's and certain domestic subsidiaries' assets, excluding intellectual property and real property.