Establishment Labs Holdings, a medical technology company focused on women’s health, initially in the breast aesthetics and reconstruction market, entered into a $225 million term loan financing facility with funds managed by Oaktree Capital Management, L.P.

“After a competitive process, we could not be more pleased to enter into this long-term strategic partnership with Oaktree,” said Raj Denhoy, Chief Financial Officer of Establishment Labs. “This is a pivotal moment for Establishment Labs, as this financing can fully fund our business to cash flow positive. This includes financing our prospective market launches in the United States and China, our product launches around the world — most notably MIA and Flora — and the construction of our new facility that will allow us to meet more than half the current world market’s demand for breast implants.”

“Establishment Labs has grown tremendously since the company’s founding over a decade ago and has cemented its position as a leader in the women’s health space, with a deep focus on breast aesthetics and reconstruction,” said Aman Kumar, Co-Portfolio Manager of Life Sciences Lending at Oaktree. “We are impressed with the long-term real-world safety profile of the Motiva implants, which are backed by the company’s state-of-the-art manufacturing and scientific processes. Oaktree is very excited to partner with the company during its next phase of anticipated growth as it seeks to enter the United States market, while continuing to expand its product offerings to women worldwide.”

The term loan facility will be available to Establishment Labs under the following terms:

• A senior secured term loan of up to $225 million. The facility will mature in five years from funding and is interest-only through to maturity. Proceeds received from the first tranche of the facility will be used to retire the company’s current term loan, to fund construction of the new Sulàyöm Innovation Campus in Costa Rica, and for general corporate purposes and working capital.

• Interest will accrue at a fixed rate of 9.00% per annum and will step down to 8.25% upon the funding conditions for the fourth tranche being met. Establishment Labs can elect to PIK up to two-thirds of cash interest payments for the first 24 months of the loan term, resulting in a minimum initial cash interest rate of 3.00%.

• The first tranche (Tranche A) of $150 million will be drawn immediately, with the remaining three tranches of $25 million each available upon the achievement of certain commercial and regulatory milestones:
  
  • Tranche B of $25 million available before September 30, 2023, and upon trailing twelve-month product net sales exceeding $145 million
  • Tranche C of $25 million available before March 31, 2024, and upon either trailing twelve-month product net sales exceeding $185 million or upon FDA approval of certain Motiva implants for use in the U.S., whichever is achieved earlier
  • Tranche D of $25 million available before December 31, 2024, and upon both trailing twelve-month product net sales exceeding $225 million and FDA approval of certain Motiva implants for use in the U.S.

Cowen acted as exclusive financial advisor to Establishment Labs.