Business Context and Reporting Period
This Form 8-K filing by Alphatec Holdings, Inc. covers events reported as of May 21, 2012, with the report signed on June 12, 2012. The company, incorporated in Delaware, operates through subsidiaries including Alphatec Spine, Inc., Alphatec International LLC, and Alphatec Pacific, Inc.
Key Financial Metrics and Agreements
The filing details a new material definitive agreement entered into on June 7, 2012:
- Credit Facility: A Loan, Security and Guaranty Agreement with MidCap Financial, LLC and other lenders.
- Capacity: Permits borrowing up to $50 million, consisting of a revolving line of credit with a maximum borrowing base of $40 million (expandable to $50 million with lender consent).
- Maturity: Due in June 2015.
- Collateral: Security interest in substantially all assets, including accounts receivable and securities evidencing interests in subsidiaries.
- Use of Proceeds: Payoff of existing line of credit with Silicon Valley Bank and funding for ongoing operations and working capital.
- Covenants: Includes financial covenants related to liquidity and earnings.
The filing does not provide specific revenue, profit, cash flow, or margin figures for the period.
Material Changes and Corporate Governance
Debt Restructuring: The company is replacing its existing line of credit with Silicon Valley Bank with the new $50 million facility from MidCap Financial.
NASDAQ Compliance: On April 30, 2012, the company received a deficiency letter from NASDAQ regarding Audit Committee composition rules (Rule 5605(c)(2)(A)). On May 21, 2012, the Board appointed Siri S. Marshall to the Audit Committee, curing the deficiency and regaining compliance.
Outlook, Risks, and Contingencies
Default Risks: The Credit Facility includes potential events of default, such as payment default and insolvency. Consequences of default may include interest rate increases of up to five percentage points or the acceleration of all outstanding obligations.
Management Commentary: The company intends to use the new facility to support working capital needs and operations. The full terms of the agreement will be filed in the Form 10-Q for the quarter ending June 30, 2012.
Investor Verification Checklist
- Verify the specific financial covenants regarding liquidity and earnings required by the new Credit Facility.
- Confirm the exact payoff amount and terms of the terminated line of credit with Silicon Valley Bank.
- Review the upcoming Form 10-Q for the quarter ending June 30, 2012, for the full text of the Loan, Security and Guaranty Agreement.
- Monitor future filings for any potential events of default or changes in the borrowing base calculation.