Paragon 28, Paragon Advanced enter $150 million facilities via Ares

By Marisa Wong

Los Angeles, Nov. 7 – Paragon 28, Inc. and its wholly owned subsidiary, Paragon Advanced Technologies, Inc., entered into a new credit agreement on Nov. 2 with Ares Capital Corp. as administrative agent and collateral agent and ACF Finco I LP as revolving agent for senior secured credit facilities totaling $150 million, according to an 8-K filing with the Securities and Exchange Commission.

The credit facilities include an up to $100 million term loan facility and an up to $50 million revolving credit facility.

The term loan includes an initial term loan in the aggregate principal amount of $75 million, funded in full on the closing date, with a delayed-draw term loan in the aggregate principal amount of $25 million available for 24 months from the closing date.

The revolver includes an asset-based revolver in a maximum principal amount of the lesser of $50 million and the amount of the borrowing base, funded in the amount of $25 million on the closing date.

Borrowings under the term loan bear interest at adjusted term SOFR plus an applicable margin ranging from 625 basis points to 675 bps, to be determined based on the company’s total leverage ratio measured on a quarterly basis.

Borrowings under the revolver bear interest at term SOFR plus an applicable margin of 400 bps.

For a period of 24 months from the closing date, at the company’s option, 50% of the applicable margin portion of any quarterly interest payment with respect to the term loan may instead be paid-in-kind, subject to a 75 bps increase to the interest rate for the applicable period.

In addition to paying interest, the borrowers are required to pay an unused line fee of the average daily unused portion of the revolver and an unused commitment fee of the average daily unused portion of the delayed-draw term loan.

The credit facilities mature on the earlier of (i) five years from the closing date and (ii) with respect to the revolver, six months prior to the maturity date of any other debt in a principal or stated amount in excess of $12.5 million.

The credit agreement includes requirements to prepay the loans in an amount equal to 100% of the net cash proceeds from certain asset dispositions, casualty events and debt issuances.

The credit agreement also contains a financial covenant requiring the company to maintain certain minimum revenue levels.

Also on Nov. 2, the company paid all outstanding amounts owed under its credit agreements with MidCap Financial Trust with a portion of the proceeds of the Ares credit facilities.

Effective as of Nov. 2, the company amended its facility with Zions Bancorp., NA, dba Vectra Bank Colorado to replace references to MidCap Financial Trust and MidCap credit agreements with references to Ares and the Ares credit agreement.

Paragon 28, based in Englewood, Colo., is an orthopedic medical device company focused exclusively on the foot and ankle.

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