Teligent gets commitment via Ares for $120 million credit facilities

By Marisa Wong

Morgantown, W.Va., Nov. 13 – Teligent, Inc. entered into a commitment letter on Nov. 12 with Ares Management LLC for up to $120 million of new senior secured credit facilities, according to an 8-K filing with the Securities and Exchange Commission.

The new facilities consist of a $25 million senior revolving credit facility, a $10 million second-lien initial term loan, a $70 million second-lien delayed draw term loan A and a $15 million second-lien delayed draw term loan B.

The revolver is subject to a borrowing base to be determined based on eligible inventory, eligible equipment, eligible real estate and eligible receivables.

The revolver will mature on the earlier of (a) six months prior to the maturity of the company’s outstanding 4.75% convertible senior notes due 2023 and (b) five years from the closing date.

The initial term loan matures on the earlier of (a) three months prior to the maturity of the 2023 notes and (b) 5.5 years from the closing date.

Commitments related to undrawn amounts of the delayed draw term loan A terminate on June 30, 2019, and drawn amounts under the delayed draw term loan A would mature at the same time as the initial term loan.

Commitments related to undrawn amounts of the delayed draw term loan B terminate one year from the closing date, and drawn amounts under the delayed draw term loan B would mature at the same time as the initial term loan.

The revolver will be used to manage working capital needs and replace the existing $25 million term loan facility, according to a press release.

The company said that $80 million of the term loans will be used to redeem its convertible bonds due December 2019, as well as provide further liquidity.

Also, $15 million of additional term loans will be available to Teligent in 2019 to fund the installation of a high-speed filling line in the company’s recently expanded sterile injectable manufacturing site in Buena, N.J.

The revolver bears interest at Libor plus 375 basis points. The new term loans bear interest at Libor plus 875 bps.

Interest on the new credit facilities is payable in cash; however, interest on the term loans is payable, at the company’s option, in cash or in kind until the earlier of the second anniversary of closing and the date that the company provides the lenders with financial statements demonstrating it has attained 12 months of revenue of at least $125 million.

A commitment fee of 100 bps is payable quarterly in arrears on the unused portion of the delayed draw term loans.

The new credit facilities are not subject to amortization.

Amounts drawn under the revolver may be prepaid without premium or penalty, subject in the case of acceleration or termination of commitments to some call protections. The revolver is subject to mandatory prepayment to the extent that aggregate extensions under the revolver would exceed the lesser of the revolving credit commitment then in effect and the borrowing base then in effect.

Outstanding term loans can be prepaid, subject to a make-whole premium and some call protections. The term loans are subject to mandatory prepayment in some cases.

The credit agreement requires the company to comply with some financial covenants consisting of a minimum revenue test, a minimum adjusted EBITDA test and a maximum total net leverage ratio.

Closing of the new facility is subject to some closing conditions. The company currently expects closing to occur on or prior to Dec. 31.

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

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