Business Context and Reporting Period
Alphatec Holdings, Inc. filed a Form 8-K on August 30, 2013, reporting the entry into a Material Definitive Agreement. The filing details a new credit facility entered into by Alphatec Holdings and its subsidiaries (Alphatec Spine, Alphatec International, and Alphatec Pacific) with MidCap Funding IV, LLC and other lenders.
Key Financial Metrics and Debt Structure
- Total Credit Facility: Up to $73 million.
- Term Facility: $28 million drawn at closing, plus a $5 million delayed draw option within 12 months.
- Revolving Facility: Maximum borrowing base of $40 million, determined by domestic eligible accounts and inventory.
- Maturity Date: July 2016.
- Interest Rates:
- Term Facility: LIBOR + 8.0% (subject to a 9.5% floor).
- Revolving Facility: LIBOR + 6.0% (reset monthly).
- Collateral: Security interest in substantially all assets, including accounts receivable and securities evidencing interests in subsidiaries.
- Use of Proceeds: Repayment of an existing $39 million revolving credit facility with Midcap Finance, LLC, payment of transaction fees, and funding for ongoing operations and working capital.
Material Changes Versus Prior Period
The filing does not provide comparative financial performance data (revenue, profit, or cash flow) for the current period versus prior periods. The primary material change is the refinancing of debt, replacing a $39 million existing facility with a new $73 million facility structure.
Guidance, Risks, and Covenants
- Covenants: The agreement includes traditional lending and reporting covenants, specifically requiring the maintenance of financial covenants related to liquidity and earnings.
- Events of Default: Includes payment default and insolvency conditions.
- Consequences of Default: Interest rates may increase by five percentage points above the effective rate, and lenders may declare all outstanding obligations immediately due and payable.
- Outlook: The filing does not contain specific forward-looking guidance on revenue or earnings growth, focusing instead on capital structure optimization.
Investor Verification Checklist
- Verify the current status of the $5 million delayed draw option and whether it has been exercised.
- Confirm compliance with the new liquidity and earnings covenants in subsequent quarterly reports.
- Monitor the borrowing base calculations to ensure the $40 million revolving capacity remains available based on eligible accounts and inventory.
- Review future filings for any events of default or changes in interest rate floors.