Boston Scientific gets $1.25 billion 364-day loan, amends facilities

By Sarah Lizee

Olympia, Wash., April 21 – Boston Scientific Corp. entered into a new $1.25 billion 364-day term loan with Bank of Nova Scotia as administrative agent on Tuesday and then used funds from the loan to refinance borrowings under its revolver to increase available backup liquidity, according to an 8-K filing with the Securities and Exchange Commission.

The company said it also modified the leverage covenant in its credit agreements to increase financial flexibility as part of its previously announced Covid-19 response efforts and mitigation plan.

Wells Fargo Securities, LLC and Bank of Nova Scotia are joint bookrunners and are joint lead arrangers alongside BofA Securities, Inc., Barclays Bank plc, Citibank, NA, JPMorgan Chase Bank, NA, Royal Bank of Canada and Societe Generale.

Wells Fargo is the syndication agent and Bank of America, NA, Barclays, Citibank, DNB Markets, Inc., JPMorgan Chase Bank, Royal Bank of Canada and Societe Generale are the documentation agents.

There is an accordion feature under which the company may borrow additional loans not to exceed $400 million.

Interest is Libor plus 187.5 basis points, based on the company’s current credit ratings.

Financial covenants require that the company maintain a maximum leverage ratio of 4.75x for the fiscal quarters ending June 30, Sept. 30 and Dec. 31, and 4.5x for the fiscal quarter ending March 31, 2021. The ratio is calculated based on EBITDA and provides for a deemed consolidated EBITDA of $670.6 million for the second, third and fourth quarters of 2020.

Also on Tuesday, the company entered into the first amendment to its $1 billion 364-day term loan credit agreement with Bank of Nova Scotia as administrative agent.

Under the amendment, the borrowers agreed to amend the definition of “material adverse effect” to address the impacts of the Covid-19 pandemic; incorporate restrictions on restricted payments; require that the company maintain a maximum leverage ratio of 4.75x for the fiscal quarters ending June 30, Sept. 30 and Dec. 31; establish a deemed consolidated EBITDA of $670.6 million for the second, third and fourth quarters of 2020; and amend the applicable margin to be 85 bps based on the company’s current credit ratings.

In addition, the company’s $2.75 billion revolver with Wells Fargo as administrative agent was amended to modify the definition of “material adverse effect” to address the impacts of the Covid-19 pandemic; incorporate restrictions on restricted payments; require that the company maintain a maximum leverage ratio of 4.75x for the fiscal quarters ending June 30, Sept. 30 and Dec. 31, 4.5x for the fiscal quarter ending March 31, 2021, 4.25x for the fiscal quarter ending June 30, 2021, 4x for the fiscal quarter ending Sept. 30, 2021 and 3.75x for the fiscal quarter ending Dec. 31, 2021 and each fiscal quarter onwards; and establish a deemed consolidated EBITDA of $670.6 million for the second, third and fourth quarters of 2020.

On Monday, borrowings from the new credit agreement were used to repay outstanding amounts under the revolver, and new borrowings under the revolver were used repay in full the $400 million remaining outstanding balance on the company’s $700 million credit agreement dated as of Dec. 5, 2019 with Wells Fargo as administrative agent.

Boston Scientific is a medical device maker based in Marlborough, Mass.

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