Item 1.01 Entry into a Material Definitive Agreement.
Bridge Facility Agreement
On March 9, 2023, Babylon Holdings Limited ("Babylon" or the "Company" and,
together with its consolidated subsidiaries, the "Group") and certain affiliates
of, or funds managed and/or advised by, AlbaCore Capital LLP (the "AlbaCore
Bridge Notes Subscribers") entered into a bridge loan notes facility agreement
(the "Bridge Facility Agreement") by and among the Company, as borrower, Babylon
Healthcare Inc., Babylon Partners Ltd., and Babylon Inc., as subsidiary
guarantors (the "Subsidiary Guarantors"), and Babylon Group Holdings Limited, a
limited company organized under the laws of England, as parent guarantor (the
"Parent Guarantor" and, together with the Subsidiary Guarantors, the
"Guarantors"), pursuant to which the AlbaCore Bridge Notes Subscribers have
agreed to provide Babylon with secured debt financing in the form of a senior
secured term loan notes facility (the "Bridge Facility") for an aggregate
principal amount of up to $34,500,000, to be funded in three tranches. The
Bridge Facility is subject to an original issue discount (calculated on the
basis of an aggregate principal amount of $30,000,000). The provision of the
Bridge Facility is subject to the satisfaction of the customary conditions
precedent described in the Bridge Facility Agreement, including the receipt of
certain security agreements and other transaction documentation.
The Parent Guarantor is a new intermediate holding company that is a
wholly-owned direct subsidiary of the Company and will, upon completion of the
transfer of ownership of the capital stock of Babylon Partners Ltd., Babylon
Inc. and Babylon Healthcare Services Limited pursuant to a sale and purchase
agreement, directly or indirectly own 100% of the capital stock of each of the
Subsidiary Guarantors. The Guarantors for the Bridge Facility must represent 90%
of the consolidated (i) gross assets or net assets and (ii) revenue, in each
case, of the Group tested semi-annually (commencing on and from December 31,
2023) and excluding Babylon Healthcare Services Limited and any member of the
Group incorporated in Brazil, India, Malaysia and Rwanda. Any individual member
of the Group, excluding Babylon Healthcare Services Limited and members of the
Group incorporated in Brazil, India, Malaysia and Rwanda, with more than 5% of
consolidated (i) gross assets or net assets, and (ii) revenue, in each case, of
the Group shall become a guarantor and grant security under the Bridge Facility.
If any dormant member of the Group, excluding members of the Group incorporated
in Brazil, India, Malaysia and Rwanda, start operations and acquire more than 1%
of consolidated (i) gross assets or net assets, or (ii) revenue, in each case,
of the Group, such members of the Group are required to become guarantors and
grant security under the Bridge Facility.
The Bridge Facility is secured principally by all the assets of the Company
including the shares in its subsidiaries, all assets of the Guarantors, the
shares of the Guarantors, agreed intercompany loans and economic interests in
the Meritage Medical Network (the "IPA Business"). The Bridge Facility contains
customary mandatory prepayment provisions including: (i) 70% of the aggregate
net cash proceeds in excess of the first $100,000,000 received on a cumulative
basis in connection with any disposals or any equity, subordinated or
convertible debt financing, subject to customary exceptions; (ii) upon a change
of control; and (iii) net cash proceeds of certain insurance claims. The Bridge
Facility contains a minimum liquidity covenant in respect of the Group which is
tested weekly, which shall be replaced by a minimum liquidity of $20,000,000,
which is tested monthly, after the Company has (i) completed the issuance of
equity, subordinated debt (including junior convertible capital) and/or a new
incurrence of pari passu ranking debt in order to raise net cash proceeds of no
less than $50,000,000, together with any amounts applied in repayment of the
Bridge Facility (the "Recapitalization") or (ii) completed a sales process
relating to the sale of the Group, a sale of a strategic minority stake in the
group or a sale of material assets or subsidiaries of the Group, in each case,
raising net cash proceeds (including the release of any restricted or trapped
cash) of no less than $150,000,000 aggregate cash proceeds (the "M&A Process").
The Company has a pre-existing financing relationship with AlbaCore Capital LLP.
On November 4, 2021, the Company issued $200,000,000 aggregate principal amount
of unsecured notes due 2026 (the "Existing Notes") to certain affiliates of, or
funds managed or advised by, AlbaCore Capital LLP (the "AlbaCore Existing Notes
Subscribers") pursuant to a note subscription agreement (the "Note Subscription
Agreement") and deed poll (the "Deed Poll") and on March 31, 2022, the Company
issued $100,000,000 aggregate principal amount of additional Existing Notes to
the AlbaCore Note Subscribers pursuant to a note subscription agreement dated
December 23, 2021 and a supplemental deed poll dated March 31, 2022. In
addition, the Company has issued warrants (the "AlbaCore Warrants") to subscribe
for Class A ordinary shares, par value $0.001056433113 per share, of the Company
(the "Class A ordinary shares") to the AlbaCore Existing Notes Subscribers
pursuant to a warrant instrument dated November 4, 2021, as amended and restated
on March 31, 2022 (the "Warrant Instrument").
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The first tranche of the Bridge Facility ("Tranche One", in an aggregate
principal amount of $13,800,000, representing $12,000,000 net of original issue
discount) will be provided from and including the date on which the conditions
precedent in respect of Tranche One have been satisfied or waived (the "Closing
Date") until March 15, 2023 and shall be subject, among other conditions, to the
public announcement by the Company disclosing the Bridge Facility within four
business days of the date of the Bridge Facility Agreement; the second tranche
of the Bridge Facility ("Tranche Two", in an aggregate principal amount of
$11,500,000, representing $10,000,000 net of original issue discount) may be
utilized from the date that is twelve business days following the date of the
Bridge Facility until April 30, 2023 subject, among other conditions, to: (i)
the prior utilization in full of Tranche One and (ii) the Company having invited
one or more potential financiers to submit non-binding term sheets or bids, as
applicable, in respect of the Recapitalization or the M&A Process; and the third
tranche of the Bridge Facility ("Tranche Three", in an aggregate principal
amount of $9,200,000, representing $8,000,000 net of original issue discount)
may be utilized from the date that is twelve business days following the date of
the Bridge Facility until May 1, 2023 subject, among other conditions, to: (i)
the prior utilization in full of Tranche One and Tranche Two; and (ii) the
Company having received binding term sheets for the Recapitalization or the M&A
Process by May 1, 2023, which may be extended until May 31, 2023, subject to
certain conditions including that the liquidity forecast of the Group through
. . .
Item 1.02 Termination of a Material Definitive Agreement.
Automatic exercise of subscription entitlement to Class A Ordinary Shares and
Amendment to the Warrant Instrument
In connection with entering into the Bridge Facility Agreement, the Warrant
Instrument shall be amended so that the subscription entitlement of the AlbaCore
Existing Notes Subscribers to receive Class A ordinary shares is deemed
automatically and irrevocably exercised following the Closing Date.
Item 2.03 Creation of Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 "Bridge Facility Agreement" of this
Current Report is hereby incorporated by reference in this Item 2.03.
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Item 9.01 - Financial Statements and Exhibits
(d) Exhibits:
Exhibit No. Description
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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