Mesa Laboratories announced the closing of its Amended and Restated Credit Agreement, which provides up to $200 million of senior secured debt through a syndicate of banks led by JPMorgan Chase Bank. The Credit Agreement includes a $75 million senior secured term loan facility and a $125 million senior secured revolving credit facility, both of which mature in April 2029. The Credit Agreement includes a ten-year amortization schedule and no springing maturity relating to the Company’s 1.375% Convertible Senior Notes due August 2025 (the “2025 Notes”). Both the Term Loan and the Revolver bear interest at a rate of SOFR plus an applicable margin ranging from 1.5% to 3.5%, depending on the Company’s total Net Leverage Ratio. Proceeds from the Term Loan and Revolver will be used to pay down the Company’s 2025 Notes and for normal operating expenditures. The Credit Agreement also allows funds to be used for permitted acquisitions.

Additionally, Mesa has entered into separate, privately negotiated transactions with certain holders of the 2025 Notes to repurchase $75 million aggregate principal amount of the 2025 Notes for an aggregate repurchase price in cash of $71.25 million. The repurchases are expected to close on or about April 11, 2024, subject to customary closing conditions.

Following these repurchases, $97.5 million aggregate principal of the Company’s 2025 Notes will remain outstanding, and the Company will have $125.5 million of long-term debt outstanding under its Term Loan and the Revolver. “We are pleased to have implemented a solution to partially settle the 2025 Notes in cash, thereby reducing potential dilution to our shareholders related to the notes. We utilized the proceeds from the Term Loan to fund the repurchases and we plan to utilize free cash flow and proceeds from the revolver to pay off the remaining notes at maturity,” said John Sakys, Chief Financial Officer of Mesa. “After the acquisition of GKE GMBH in October 2023 and GKE China on December 31, 2023, our total Net Leverage Ratio, as calculated per the terms of our Credit Facility, was less than 3.9x. Consistent with our approach after previous acquisitions, we are committed to paying down our debt balances. We aim to reduce our total net leverage ratio to below 3x over approximately the next 18 months,” concluded Mr. Sakys.