On March 31, 2023, (the "Closing Date"), Cerus Corporation (the "Company") reported to have entered into (i) an Amended and Restated Credit, Security and Guaranty Agreement (Term Loan) (the "Term Loan Credit Agreement"), by and among the Company, the lenders party thereto from time to time and MidCap Financial Trust, as agent and a lender, which amended and restated the Company’s existing Credit, Security and Guaranty Agreement (Term Loan), dated as of March 29, 2019, as amended (the "Existing Term Loan Credit Agreement") and (ii) an Amended and Restated Credit, Security and Guaranty Agreement (Revolving Loan) (the "Revolving Loan Credit Agreement," and together with the Term Loan Credit Agreement, the "Credit Agreements"), by and among the Company, the lenders party thereto from time to time and MidCap Funding IV Trust, as agent and a lender, which amended and restated the Company’s existing Credit, Security and Guaranty Agreement (Revolving Loan), dated as of March 29, 2019, as amended (the "Existing Revolving Loan Credit Agreement") (Filing, 8-K, Cerus, MAR 31, 2023, View Source [SID1234629828]).
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The Term Loan Credit Agreement provides a secured term loan facility in an aggregate principal amount of up to $75.0 million. The Company borrowed the first advance of $40.0 million ("Tranche 1") and the second advance of $15.0 million ("Tranche 2") on the Closing Date to refinance the term loans under the Existing Term Loan Credit Agreement. Under the terms of the Term Loan Credit Agreement, (i) the third advance of $10.0 million ("Tranche 3") will be available to the Company through July 1, 2024, subject to the Company’s satisfaction of certain conditions described in the Term Loan Credit Agreement, and (ii) the fourth advance of $10.0 million ("Tranche 4"), will be available to the Company from July 1, 2024 through July 1, 2025, subject to the Company’s satisfaction of certain other conditions described in the Term Loan Credit Agreement. The proceeds from Tranche 3 and Tranche 4 are expected to be used for working capital and general corporate purposes.
Tranche 1 and Tranche 2 and, if borrowed, Tranche 3 and Tranche 4, each bear interest at a floating rate equal to the sum of the Term SOFR rate (subject to a floor of 1.00%) plus 6.50%. Interest on each term loan advance is due and payable monthly in arrears. Interest only payments are due for the first 36 months, and the remaining payments are due over the remaining 24 months. The interest only payment period can be extended for 12 months upon achievement of a specified trailing twelve month net revenue target. Prepayments of the term loans under the Term Loan Credit Agreement, in whole or in part, will be subject to early termination fees which decline each year until the fourth anniversary, at which time there is no early termination fee. The Company also must pay an annual administrative fee equal to a fractional percentage of the amount outstanding pursuant to the Term Loan Credit Agreement, and upon the final payment must also pay an exit fee of a percentage of the amount borrowed pursuant to the Term Loan Credit Agreement (the "Exit Fee"). The Company is required to pay a pro rata portion of the Exit Fee in connection with any prepayment.
The Revolving Loan Credit Agreement provides a secured revolving credit facility in an initial aggregate principal amount of up to $20.0 million. The Company may request an increase in the total commitments under the Revolving Loan Credit Agreement by up to an additional $15.0 million, subject to agent and lender approval and the satisfaction of certain conditions. Availability of the revolving credit facility under the Revolving Loan Credit Agreement will be based upon a borrowing base formula and periodic borrowing base certifications valuing certain of the Company’s accounts receivable and inventory, as reduced by certain reserves, if any. As of the Closing Date, there was $18.0 million outstanding under the Revolving Loan Credit Agreement. The proceeds of any loans under the Revolving Loan Credit Agreement may be used for working capital and general corporate purposes.
Loans under the Revolving Loan Credit Agreement accrue interest at a floating rate equal to the Term SOFR rate (subject to a floor of 1.00%) plus 3.75%. Accrued interest on the revolving loans will be paid monthly and revolving loans may be borrowed, repaid and re-borrowed until March 1, 2028, when all outstanding amounts must be repaid. Termination or permanent reductions of the revolving loan commitment under the Revolving Loan Credit Agreement will be subject to termination fees which decline each year until the fourth anniversary, at which time there is no early termination fee.
In connection with the Revolving Loan Credit Agreement, the Company is required to pay customary fees, including an origination fee equal to a fractional percentage of the original commitment amount at closing (and an equivalent origination fee with respect to any increased commitments at the time of the applicable increase), a monthly unused line fee based upon the average daily unused allowable borrowing base of the revolving credit facility and a monthly collateral management fee based upon the average daily used portion of the revolving credit facility. The Company is also required to maintain a minimum drawn balance under the revolving line or pay interest on the minimum drawn balance.
The Company’s obligations under the Credit Agreements are secured by a security interest on substantially all of its assets, with some exclusions.
The Credit Agreements contain customary affirmative covenants and customary negative covenants limiting the Company’s ability and the ability of the Company’s subsidiaries, if any, to, among other things, dispose of assets, undergo a change in control, merge or consolidate, make acquisitions, incur debt, incur liens, pay dividends, repurchase stock and make investments, in each case subject to certain exceptions. The Company must also comply with a financial covenant relating to trailing twelve month minimum net revenue requirements, tested on a quarterly basis.
The Credit Agreements also contain customary events of default relating to, among other things, payment defaults, breaches of covenants, a material adverse change, listing of the Company’s common stock, bankruptcy and insolvency, cross defaults with certain material indebtedness and certain material contracts, judgments, and inaccuracies of representations and warranties. Upon an event of default, agent and the lenders may declare all or a portion of the Company’s outstanding obligations to be immediately due and payable and exercise other rights and remedies provided for under the agreement. During the existence of an event of default, interest on the obligations could be increased.
The foregoing description of the terms of the Credit Agreements does not purport to be complete and is qualified in its entirety by reference to the full text of the Credit Agreements, copies of which will be filed with the Securities and Exchange Commission as exhibits to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023.