Teligent amends first-, second-lien credit agreements, ups pricing

By Sarah Lizee

Olympia, Wash., April 8 – Teligent, Inc. amended its first-lien revolving credit agreement and second-lien credit agreement on Monday to reduce the minimum financial performance required by the company to comply with quarterly trailing-12-month financial covenants for an increase in the cost of capital, among other changes, according to a press release.

ACF Finco I LP, a limited partnership affiliated with Ares Management Corp., is the administrative agent for the first-lien revolver, and Ares Management is the administrative agent for the second-lien credit agreement.

Specifically, the first-lien amendment increased the interest rate to Libor plus 550 basis points from Libor plus 375 bps, reset prepayment premiums and modified the terms of mandatory prepayments and modified some financial covenant levels.

In addition, the interest rate floor increased by 0.5% for Libor loans.

The first-lien amendment resets the period during which a prepayment premium may be required until the date that is 30 months after the amendment closing date.

Covenants were also changed so that a new minimum net revenue covenant is added that is tested on the last day of each fiscal quarter until the quarter ending Dec. 31, 2020, a minimum consolidated adjusted EBITDA covenant that is tested on the last day of each fiscal quarter ending during the period from March 31, 2021 to Sept. 30, 2022 is reset, a total net leverage covenant is eliminated and a minimum liquidity covenant is added and will be tested at all times during the term of the first-lien credit agreement.

The second-lien amendment increased the interest rate to Libor plus 1,300 bps from Libor plus 875 bps, modified provisions relating to interest payable in kind, modified the terms of mandatory prepayments and modified covenants.

In addition, the interest rate floor increased by 0.5%.

The second-lien amendment extends the period in which the company is permitted to pay interest in kind on the loans from Dec. 13 to Dec. 13, 2021 but only if the following occurs: the company receives a “warning letter close-out letter” from the Food and Drug Administration in response to corrective actions taken by the company since receipt of the warning letter in November 2019 and the company receives a written recommendation from the FDA setting forth its approval decision in respect of the pre-approval inspection for commercial production on the newly installed injectable line at the company’s New Jersey facility.

If only one of those items occurs by Dec. 13, then the company may still elect to pay interest in kind during 2021, but only from the time the second condition has been satisfied until Dec. 13, 2021. After that, a portion of interest on the loans accruing at a rate of 4.25% per annum may continue to be paid in kind.

The financial covenants in the second-lien credit agreement were changed in line with the covenants modified in the first-lien agreement.

In connection with the second-lien amendment, on April 6, the company issued to the lenders party to the second-lien credit agreement warrants to purchase shares of the company’s common stock. The warrants are exercisable for up to 5,389,949 shares of the company’s common stock at an exercise price of $0.01 per share of common stock. The warrants will become exercisable at any time after the company implements the reverse stock split previously approved by its stockholders and will remain exercisable, in whole or in part, for a period of five years.

Teligent is a specialty generic pharmaceutical company based in Buena, N.J.

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