Surmodics enters credit agreement worth up to $125M

2022-10-17

Eden Prairie, Minnesota-based Surmodics’ agreement includes up to $100 million in term loans and a $25 million revolving credit facility. “We are pleased to significantly improve our access to capital on favorable, non-dilutive terms with credit facilities that provide increased borrowing capacity and financial flexibility,” said Gary Maharaj, president and CEO of Surmodics. “Our initial borrowings, coupled with the expected milestone payment from our partner, Abbott, following the anticipated premarket approval from the Food and Drug Administration for our SurVeil drug-coated balloon, will provide important capital to strengthen our balance sheet and support our long-term growth strategy.” Surmodics drew $25 million on the term loan and $5 million on the credit facility at close. It used some of the proceeds to retire its existing $25 million revolving credit facility with Bridgewater Bank. That facility included $10 million outstanding. Upon closing, Surmodics increased its cash balance by $19.5 million. Additional terms The company may make additional draws on the term loan in $10 million minimum increments. That can total as much as $75 million through Dec. 31, 2024. MidCap possesses an option to make a second tranche of $25 million available through Dec. 31, 2024. Availability to draw on the revolving credit facility rests primarily on Surmodics’ inventory and receivable balances. The agreement calls for interest-only payments on the term loan over the first four years. Surmodics may extend that to five years if it meets certain criteria. The credit facility matures in five years. In connection with the term loan, Surmodics entered into an interest-rate swap arrangement with Wells Fargo. The agreement fixes the initial borrowing on the term loan’s variable base rate for the five-year loan term. Surmodics expects total interest expense and fees under the agreement to reach $3.4 million in fiscal 2023.

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