Long-Term Debt

12 Months Ended

Dec. 31, 2023

LONG-TERM DEBT

The Company’s long-term debt consisted of the following:


	Dec. 31,
(in thousands)	2023		2022
Term Loan Facilities	$	502,796	$	518,133

Less: Unamortized debt discount and issuance costs	(5,091)		(8,053)
Total debt	497,705		510,080
Less: Current portion of long-term debt	(75,000)		(5,270)
Total long-term-debt	$	422,705	$	504,810

Maturities of long-term debt for each of the next five years is as follows:


(in thousands)
2024	$	75,000
2025	427,796
2026	—
2027	—
2028	—
Thereafter	—
Total	$	502,796

Term Loan Facilities

During 2019, Norvax (the “Borrower”) entered into a first lien credit agreement (the “Credit Agreement”) which provided for a $300.0 million aggregate principal amount senior secured term loan facility (the “Initial Term Loan Facility”). During 2020 and 2021, the Company entered into a series of amendments to the Credit Agreement to provide for, among other items as further described below, (i) $117.0 million of incremental term loans (the “Incremental Term Loan Facility”), (ii) a new class of incremental term loans (the ”2021 Incremental Term Loans”) in an aggregate principal amount equal to $310.0 million, which was used to refinance $295.5 million of outstanding principal under the Initial Term Loan Facility, and (iii) a new class of incremental term loans (the “2021-2 Incremental Term Loans”) in an aggregate principal amount equal to $100.0 million. In connection with the refinancing of the Initial Term Loan, the Company recognized an $11.9 million loss on debt extinguishment, representing the 2% prepayment premium of $5.9 million and the write-down of deferred financing costs and debt discounts of $6.0 million. The Company incurred $1.7 million of debt issuance costs, which are being amortized over the life of the debt to interest expense using the effective interest method. In connection with the 2021-2 Incremental Term Loans, the Company incurred $2.5 million of debt issuance costs, which are being amortized over the life of the debt to interest expense using the effective interest method.

The Company collectively refers to the Initial Term Loan Facility, the Incremental Term Loan Facility, the 2021 Incremental Term Loans and the 2021-2 Incremental Term Loans as the “Term Loan Facilities.”

Through a series of amendments during 2022, the Company amended the Term Loan Facilities to, among other things, all bear interest at either (i) ABR plus 6.50% per annum or (ii) LIBOR plus 7.50% per annum. The Company incurred an aggregate of $2.7 million of debt issuance costs associated with the 2022 amendments, which are being amortized over the life of the debt to interest expense using the effective interest method.

On March 15, 2023, the Company entered into Amendment No. 10 to the Credit Agreement (“Amendment No. 10”). Amendment No. 10 amended the Credit Agreement to convert the existing London Interbank-Offered Rate (“LIBOR”)-based rate applicable to the Term Loan Facilities and Revolving Credit Facilities under the Credit Agreement to a Term Secured Overnight Financing Rate (“SOFR”) Rate with a credit spread adjustment of 0.10%, 0.15% or 0.25% per annum for interest periods of one month, three months, or six months, respectively, and a floor of 1.00%, effective on the amendment date. The Company adopted ASU No. 2020-04, Reference Rate Reform on March 15, 2023 upon the entry into Amendment No. 10.

On March 12, 2024, the Borrower entered into Amendment No. 11 to the Credit Agreement (“Amendment No. 11”). Prior to Amendment No. 11, the Revolving Credit Facilities were separated into two classes of revolving commitments consisting of Class A Revolving Commitments in the amount of $30.0 million (the “Class A Revolving Commitments”) and Class B Revolving Commitments in the amount of $170.0 million (the “Class B Revolving Commitments”), each maturing on September 13, 2024. In connection with Amendment No. 11, each existing lender under the Class A Revolving Commitments and the Class B Revolving Commitments received the option to extend the maturity of their respective commitments through June 30, 2025. Under the terms of Amendment No. 11, the lenders consenting to the extension formed a new tranche of Class A Revolving Commitments (the “New Class A Revolving Commitments”) and the non-consenting lenders remain part of the existing Class B Revolving Commitments (the “Remaining Class B Revolving Commitments”). Each consenting lender received a 50% commitment reduction, resulting in a total of $88.5 million available to the Company under the New Class A Revolving Commitments, with $23.5 million remaining available to the Company under the Remaining Class B Revolving Commitments. The new Class A Revolving Commitments mature on June 30, 2025 and bear interest at either ABR plus 5.50% per annum or SOFR plus 6.50% per annum. The remaining Class B Revolving Commitments continue to mature on September 13, 2024 and bear interest at either ABR plus 3.00% per annum or SOFR plus 4.00% per annum. In addition, Amendment No. 11 amended the Credit Agreement to, among other things, (i) increase the interest rate applicable to the Term Loan Facilities after August 31, 2024 to either ABR plus 7.00% or SOFR plus 8.00%, (ii) modify the financial covenant testing to be based on a Net Cash Leverage Ratio, as defined in Amendment No. 11, for reporting periods from December 31, 2023 and onwards, (iii) require the Company to repay $50 million and $25 million in borrowings under the Term Loan Facilities by April 12, 2024 and October 15, 2024, respectively together with applicable consent fees and (iv) modify the permitted usage of certain of the baskets available under the Credit Agreement. Finally, Amendment No. 11 provides that if the Company undertakes a securitization transaction prior to the maturity of the New Class A Revolving Commitments, the New Class A Revolving Commitments will further be reduced by 50%.

As of December 31, 2023, the Company had a principal amount of $110.4 million, $296.3 million and $96.1 million outstanding under the Incremental Term Loan Facility, the 2021 Incremental Term Loans and the 2021-2 Incremental Term Loans, respectively. As of December 31, 2022, the Company had a principal amount of $113.7 million, $305.4 million and $99.0 million outstanding under the Incremental Term Loan Facility, the 2021 Incremental Term Loans and the 2021-2 Incremental Term Loans, respectively. The effective interest rate of the Term Loan Facilities was 13.0% and 11.2% at December 31, 2023 and 2022, respectively.

The remaining unpaid balance on the Term Loan Facilities, together with all accrued and unpaid interest thereon, is due and payable on or prior to September 13, 2025.

Voluntary Prepayment

The Borrower may voluntarily prepay outstanding borrowings under the Term Loan Facilities at any time in whole or in part without premium or penalty; provided, that, with respect to voluntary prepayments of the Term Loan Facilities and in certain other circumstances, the Borrower may have to pay a prepayment premium.

Mandatory Prepayments

The Credit Agreement previously required that the Borrower, following the end of each fiscal year, offer to repay the outstanding principal amount of all term loans under the Credit Facilities in an aggregate amount equal to (A) 50.0% of the excess cash flow of the Borrower and its restricted subsidiaries for such fiscal year if the Total Net Leverage Ratio (as defined in the Credit Agreement) is greater than 4.50:1.00, which percentage is reduced to 25% if the Total Net Leverage Ratio is less than or equal to 4.50:1.00 and greater than 4.00:1.00, which percentage is further reduced to 0% if the Total Net Leverage Ratio is less than or equal to 4.00:1.00, minus (B) at the option of the Borrower, (x) the aggregate amount of certain voluntary prepayments of term loans under the Credit Agreement during such fiscal year or after year-end and prior to the time such Excess Cash Flow prepayment is due, (y) the aggregate principal amount of any voluntary prepayments of indebtedness under pari passu incremental facilities, incremental equivalent debt and/or certain refinancing indebtedness, made during such fiscal year or after such fiscal year and prior to the time such prepayment is due. With respect to each required offer of prepayment, each lender of the term loans has the right to refuse any such offer. To the extent any such offer of prepayment is refused, the aggregate amount of the offered prepayment shall be retained by the Borrower and its restricted subsidiaries. Subject to these terms, the lenders accepted the Company’s offer of prepayment in connection with fiscal year 2022, and as such, the Company paid $14.0 million during the second quarter of 2023. No other mandatory prepayments were required or made during the twelve months ended December 31, 2023, 2022 and 2021.

Principal repayment obligations are reduced by the amount of any prepayment, and as such, the $14.0 million prepayment during the second quarter of 2023 satisfied the Company’s principal repayment obligations through the second quarter of 2025.

Amendment No. 11 requires two prepayments in 2024 totaling $75.0 million. No other prepayments shall be required during 2024.

The Credit Agreement requires the Borrower to repay amounts equal to 100% of the net cash proceeds of certain asset sales or other dispositions of property (including insurance and condemnation proceeds); provided, that, in the case of any prepayment events required in connection with certain dispositions and casualty events, if the net proceeds therefrom are invested (or committed to be invested) within twelve months after the receipt of such net proceeds, then no prepayment shall be required except to the extent such net proceeds have not been so invested (or committed to be invested) by the end of such 12-month period.

The Credit Agreement requires 100% of the net proceeds from the issuance or incurrence of certain indebtedness to be applied to prepay the term loans under the Term Loan Facilities, except to the extent the indebtedness constitutes refinancing indebtedness.

Revolving Credit Facilities

The Credit Agreement provided for a $30.0 million aggregate principal amount senior secured revolving credit facility (the “Revolving Credit Facility”). During 2020 and 2021, the Company entered into a series of amendments to the Credit Agreement to provide for $28.0 million of incremental revolving credit (the “Incremental Revolving Credit Facilities”), and $142.0 million of incremental revolving credit (the “Incremental No. 4 Revolving Credit Facility”), respectively, for a total amount of $200.0 million.

The Company collectively refers to the Revolving Credit Facility, the Incremental Revolving Credit Facilities and the Incremental No. 4 Revolving Credit Facility as the “Revolving Credit Facilities.” The Revolving Credit Facilities are separated into two classes of revolving commitments consisting of Class A Revolving Commitments in the amount of $30.0 million and Class B Revolving Commitments in the amount of $170.0 million.

Amendment No. 10, as described above, further provided that borrowings under the Class A Revolving Commitments bear interest at either ABR plus 5.50% per annum or SOFR plus 6.50% per annum. Borrowings under the Class B Revolving Commitments bear interest at either ABR plus 3.00% per annum or SOFR plus 4.00% per annum. The Borrower is required to pay a commitment fee of 0.50% per annum under the Revolving Credit Facilities.

Amendment No. 11, as described above, changed the two classes of revolving commitments, effective March 12, 2024.

The Company had no amounts outstanding under the Class A Revolving Credit Facilities and Class B Revolving Credit Facilities as of December 31, 2023 and December 31, 2022. The Revolving Credit Facilities had a remaining capacity of $200.0 million in the aggregate as of December 31, 2023 and December 31, 2022.

Outstanding borrowings under the Revolving Credit Facilities do not amortize and are due and payable on June 30, 2025 under Amendment No. 11.

Guarantees and Security

The Borrower’s obligations under the Term Loan Facilities and Revolving Credit Facilities are guaranteed by Blizzard Midco, LLC and certain of the Borrower’s subsidiaries. All obligations under the Credit Agreement are secured by a first priority lien on substantially all of the assets of the Borrower, including a pledge of all of the equity interests of its subsidiaries.

Covenants and Other Matters

The Credit Agreement contains a number of covenants that, among other things and subject to certain exceptions, restrict the Borrower’s and its restricted subsidiaries’ ability to incur indebtedness; incur certain liens; consolidate, merge or sell or otherwise dispose of assets; make investments, loans, advances, guarantees and acquisitions; pay dividends or make other distributions on equity interests, or redeem, repurchase or retire equity interests; enter into transactions with affiliates; alter the business conducted by the Company and subsidiaries; change their fiscal year; and amend or modify governing documents. In addition, the Credit Agreement contains financial and non-financial covenants. The Company is in compliance with all covenants as of December 31, 2023.

The Credit Agreement also contains certain customary representations and warranties and affirmative covenants, and certain reporting obligations. In addition, the lenders under the Credit Facilities will be permitted to accelerate all outstanding borrowings and other obligations, terminate outstanding commitments and exercise other specified remedies upon the occurrence of certain events of default (subject to certain grace periods and exceptions), which include, among other things, payment defaults, breaches of representations and warranties, covenant defaults, certain cross-defaults and cross-accelerations to other indebtedness, certain events of bankruptcy and insolvency, certain judgments and changes of control. Subject to certain limited exceptions, substantially all of the Company’s assets are restricted from distribution.