Business Context and Reporting Period
Alphatec Holdings, Inc. filed this Form 8-K on March 16, 2010, reporting the entry into a material definitive agreement dated March 26, 2010. The company, incorporated in Delaware, operates through its wholly owned subsidiary, Alphatec Spine, Inc.
Key Financial Metrics and Debt Structure
The filing details a new Credit Facility with Silicon Valley Bank and Oxford Finance Corporation. The filing text does not provide current revenue, profit, cash flow, or margin data.
- Total Borrowing Capacity: Up to $40 million.
- Term Note: $15 million with an initial interest rate of 12.0% per annum.
- Working Capital Line: $25 million, based on eligible accounts and inventory.
- Line Interest Rate: The greater of 8.5% or SVB's prime rate plus 4.5%.
- Maturity Date: April 1, 2012.
- Use of Proceeds: Ongoing operations and working capital needs.
Material Changes and Covenants
The company amended its existing Loan and Security Agreement to establish the new Credit Facility. The agreement includes customary lending and reporting covenants that prohibit Alphatec from assuming further debt obligations or liens unless permitted. In the event of a default (including payment failures, covenant breaches, or insolvency), the interest rate may increase by up to five percentage points, and all outstanding obligations become immediately due and payable.
Outlook and Risks
Management intends to use the facility to support operational liquidity. The primary risk identified is the potential acceleration of debt and increased interest rates upon the occurrence of an event of default. The full text of the Credit Facility will be filed as an exhibit to the Form 10-Q for the fiscal quarter ended March 31, 2010.
Investor Verification Checklist
- Verify the specific calculation methodology for "eligible accounts and eligible inventory" determining the $25 million line availability.
- Review the full Credit Facility agreement (to be filed in the Q1 2010 10-Q) for detailed definitions of "event of default" and permitted debt exceptions.
- Confirm the company's current leverage ratios and ability to service the 12.0% term note interest.
- Monitor compliance with the negative covenant prohibiting additional debt or liens.