Accuray Incorporated has closed a $70 million straight debt financing agreement with Cerberus Business Finance, LLC, an affiliate of Cerberus Capital Management, L.P. The net proceeds of the loan are required to be used, in addition to $30 million of cash funded by Accuray, to retire $100 million of convertible notes at the earlier of August 2016 or when otherwise redeemed.

This financing consists of a $70 million first lien senior secured term loan with a 700 basis point margin and 1 percent LIBOR floor. The loan will be amortized at 5 percent annually with final payment due in five years, and is subject to certain maintenance-based covenants. Management currently expects to repay the loan's principal with cash generated from operations.

"In today's volatile financial markets, the ability to secure this type of capital financing with Cerberus and eliminate the potential issuance of approximately 10.6 million shares of our common stock demonstrates our progress in commercial execution and shows confidence in our long-term financial plans and stability," said Joshua H. Levine, president and chief executive officer of Accuray. "As our preliminary second quarter results released yesterday and the reiteration of our full year 2016 guidance show, our company is building solid, sustainable momentum. The funding enables us to improve Accuray's capital structure and increases shareholder value moving forward."

Cowen and Company acted as financial advisor to Accuray and served as sole arranger for the transaction.

Accuray Incorporated is a radiation oncology company that develops, manufactures and sells precise, innovative treatment solutions that set the standard of care with the aim of helping patients live longer, better lives. The company's leading-edge technologies deliver the full range of radiation therapy and radiosurgery treatments.