Emergent BioSolutions closed a new credit facility agreement with Oak Hill Advisors for a term loan of up to $250 million. Emergent used a portion of the proceeds of the New Term Loan to repay all amounts outstanding under the senior term loan facility under the Amended and Restated Credit Agreement, dated October 15, 2018, by and among Emergent, the lenders party thereto from time to time, and Wells Fargo Bank as the Administrative Agent (as amended, the “Prior Credit Agreement”), which was scheduled to mature in May 2025. The New Term Loan maturity extends up to five years, through August 2029. Excess proceeds from the refinancing will result in additional cash to the balance sheet. Emergent also terminated its obligations under the senior term loan facility and the revolving credit facility under the Prior Credit Agreement.
“For the past 18 months, Emergent has executed on a series of actions to strengthen the balance sheet and streamline operations,” said Joe Papa, president and CEO of Emergent. “These steps, which include finalizing several asset/site divestures, resolving legacy issues, and now, securing this significant debt refinancing, are critical to stabilizing our financial profile.”
In connection with the execution of the New Term Loan, Emergent issued the lenders warrants to purchase 2.5 million shares of common stock with a strike price at a premium to the volume weighted average price per share for the 30 trading days ending on, but excluding, the 10th business day following the closing date (the “30-Day VWAP”). In addition, subject to certain limitations Emergent agreed to issue the lenders shares of common stock with an aggregate value of $10 million at a price per share equal to the 30-Day VWAP.
Papa continued, “We are thrilled to secure this new credit facility with Oak Hill Advisors as we are on track to reduce net debt by more than $200 million this year, positioning Emergent to enter its next phase of our turnaround, enabling future growth and additional investment opportunities with much greater freedom and flexibility to operate through favorable terms.”
As the lead agent, Oak Hill Advisors provides valuable partnership opportunities and access to capital to allow execution on turnaround plans across key market segments.
Joseph Goldschmid, Managing Director at Oak Hill Advisors, added, “We are delighted to be a capital partner to Emergent. This financing provides Emergent with additional liquidity and flexibility to deliver on its business plan and continue to provide critical, life-saving products. We are excited to support and partner with the management team and the company in this next chapter of scalable and profitable growth.”