RTI closes $100 million term loan for Paradigm buy, reduces revolver

By Wendy Van Sickle

Columbus, Ohio, March 11 – RTI Surgical, Inc. entered into a second-lien credit agreement with Ares Capital Corp. providing for a $100 million term loan due Dec. 5, 2023, according to an 8-K filing with the Securities and Exchange Commission.

The full term loan was drawn at closing and used for RTI’s acquisition of Paradigm Spine, LLC, a New York company that develops non-fusion spinal implant technology, in a cash and stock transaction valued at up to $300 million, consisting of $150 million at closing plus potential future milestone payments.

Borrowings bear interest at an initial rate of Libor plus 850 basis points.

The margin is subject to adjustment after the end of each fiscal quarter, based upon total net leverage ratio.

At any time during the period from March 8 to March 8, 2021, if the RTI’s total net leverage ratio is greater than 4.5x, it may elect to pay 50% of the interest that will accrue in the next quarterly period in kind by capitalizing it and adding it to the principal balance. If the PIK option is exercised, the margin will be increased by 75 bps.

RTI may make optional prepayments on the term loan, but such prepayments will be subject to a premium through March 8, 2022.

Also on Friday, RTI amended its credit agreement with JPMorgan Chase Bank, NA as administrative agent to reduce the revolving commitments by $25 million to $75 million.

The Alachua, Fla., company prepares human donated tissue and bovine tissue for transplantation.

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