Zimmer Biomet gets new $1 billion revolving facility, amends others

By Sarah Lizee

Olympia, Wash., April 29 – Zimmer Biomet Holdings, Inc. entered into a $1 billion revolving credit agreement due Dec. 31, 2020 on April 23 with Bank of America, NA as administrative agent, according to an 8-K filing with the Securities and Exchange Commission.

BofA Securities, Inc., BNP Paribas Securities Corp., Citibank, NA and JPMorgan Chase Bank, NA are joint lead arrangers and joint bookrunners. Credit Suisse Loan Funding LLC, HSBC Bank USA, NA, Mizuho Bank, Ltd., MUFG Union Bank, NA, Royal Bank of Canada and Sumitomo Mitsui Banking Corp. are the documentation agents. BNP, Citi and JPMorgan are syndication agents.

Pricing is Libor plus 145 basis points to 200 bps until Sept. 30, when the rate will increase to Libor plus 170 bps to 225 bps. The margin and fee are based on the company’s ratings.

The facility fee ranges from 30 bps to 50 bps and is also based on ratings.

Borrowings will be used for general corporate purposes.

The revolver requires the company to maintain a consolidated debt to consolidated EBITDA ratio as of the last day of any period of four consecutive fiscal quarters of no greater than 5.75 to 1.00.

The facility is also subject to mandatory prepayment requirements and corresponding commitment reductions upon the issuance of debt above $25 million, subject to specified carve-outs.

The company also amended its credit agreement dated as of Nov. 1, 2019 with JPMorgan as general administrative agent, JPMorgan Chase Bank, NA, Tokyo Branch as Japanese administrative agent and J.P. Morgan Europe Ltd. to temporarily increase the maximum permitted consolidated leverage ratio, temporarily increase the interest rate margin applicable to revolving loans and the facility fee, and make other administrative changes.

Under the amendment, the maximum permitted consolidated leverage ratio will be 5.75 to 1.00 for periods ending from April 1 to and including Dec. 31, 5 to 1 for the period ending March 31, 2021, and 4.5 to 1.0 for periods ending after April 1, 2021, with the ratio subject to increase to 5 to 1 for a period of time in connection with a qualified material acquisition on or after July 1, 2021.

The amendment also lifts the interest rate to Libor plus 122.5 bps to 155 bps and the facility fee will range from 15 bps to 32.5 bps until March 31, 2021, when the rate will change to Libor plus 79.5 bps to 140 bps and the fee will changes to 8 bps to 22.5 bps, in each case based on ratings.

Also on Tuesday, Zimmer amended its ¥21.3 billion term loan agreement and its ¥11.7 billion amended and restated term loan agreement dated as of Sept. 22, 2017 with Sumitomo Mitsui Banking Corp.

The amendment provides for a temporary increase in the maximum permitted consolidated leverage ratio, in line with the Nov. 1, 2019 credit agreement.

Zimmer Biomet, based in Warsaw, Ind., designs, manufactures and markets orthopedic reconstructive and other products.

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