Danimer Scientific, a leading next-generation bioplastics company focused on the development and production of biodegradable materials, closed a new senior secured term loan (“Term Loan”) with an aggregate principal amount of $130 million that expands its capital structure, significantly improves its near-term liquidity position, and enables it to maintain strategic and operational flexibility as it executes its growth strategy.
Stephen E. Croskrey, Danimer’s Chairman and Chief Executive Officer, commented, “We are pleased to complete this transaction, as it provides us with the financial flexibility to better navigate the market environment as we grow our business. We elected to enhance our liquidity position through debt as we view this as a much better alternative than dilution to shareholders at current market prices. We believe that our growth opportunities are excellent and that our PHA-based biodegradable resins are disrupting the use of petroleum-based plastic across a range of end-use categories. We are looking forward to taking full advantage of our successful expansion of capacity in our Kentucky manufacturing facility, and we are energized by the momentum in our business.”
The Term Loan, arranged by Jefferies, bears interest at an annual rate of 14.4 percent, is secured by the assets of the Company, and is backed pursuant to the terms of the loan agreement by collateral protection insurance arranged by AON plc. After customary fees and expenses associated with the transaction, net proceeds to the Company were $98.6 million of which $12.5 million will be held in a restricted reserve account for future interest payments. The result is a net increase of $86.1 million of liquidity to Danimer to support general corporate purposes. The Term Loan contains a minimum liquidity requirement that will terminate upon obtaining the necessary consents for one of its subsidiaries to be become a guarantor under the Term Loan, which the Company expects to obtain within approximately 45 days. In connection with the Term Loan, Danimer issued a warrant to Jefferies to purchase 1,500,000 shares of the Company’s Class A common stock at an exercise price of $7.50 per share, subject to customary adjustments, at any time during the five-year exercise period.
The Company noted that the Term Loan matures on the earlier of March 17, 2027, or September 15, 2026, if more than $100 million principal amount of the Company’s current convertible notes remains outstanding at such date.