Item 1.01. Entry into a Material Definitive Agreement.
On July 11, 2022 (the "Closing Date"), in connection with the closing of the
acquisition of CartiHeal (2009) Ltd. ("CartiHeal") as disclosed under Item 2.01
below (the "CartiHeal Acquisition"), Bioventus LLC, a Delaware limited liability
company and subsidiary of Bioventus Inc. ("Bioventus LLC" or the "Company") and
certain of its subsidiaries entered into an Amendment No. 3 to the Credit and
Guaranty Agreement (the "Third Amendment") with Wells Fargo Bank, National
Association, as administrative agent and collateral agent, and the lenders and
other financial institutions party thereto, which amended the Credit and
Guaranty Agreement, dated as of December 6, 2019 (the "2019 Credit Agreement,"
and, as amended by that certain Amendment No. 1 to Credit and Guaranty
Agreement, dated as of August 29, 2021, by the Second Amendment to Credit and
Guaranty Agreement, dated as of October 29, 2021, and by the Third Amendment,
the "Third Amended Credit Agreement").
2022-1 Term Loans
Through the Third Amendment, the lenders agreed to extend a term loan facility
(the "2022-1 Term Loans") to Bioventus LLC in an aggregate principal amount of
$80.0 million. The proceeds of the 2022-1 Term Loans will be used (i) to finance
the CartiHeal Acquisition; (ii) to pay related fees and expenses and (iii) for
working capital needs and general corporate purposes of the Company, including
without limitation for permitted acquisitions. The 2022-1 Term Loan will mature
on October 29, 2026. There are scheduled quarterly principal payments, with the
final payment of remaining outstanding amounts at maturity. Bioventus LLC may
voluntarily prepay the 2022-1 Term Loan without premium or penalty upon prior
notice.
Interest
With respect to the 2022-1 Term Loans and each of the other term loans and
revolving facility of Bioventus LLC outstanding under the Third Amended Credit
Agreement as of the Closing Date, Bioventus LLC may elect either SOFR or Base
Rate interest rate options for the entire amount or certain portions of the
loans and have interest rates equal to a formula driven base interest rate plus
a margin, tied to a leverage ratio. The leverage ratio is the ratio of debt to
Consolidated Adjusted EBITDA as defined in the Third Amended Credit Agreement
for four consecutive quarters at the end of each period. Following the Closing
Date, initially SOFR loans and Base Rate loans had a margin of 3.25% and 2.25%,
respectively.
Other
The Third Amended Credit Agreement contains customary affirmative and negative
covenants, including those related to financial reporting and notification,
restrictions on the declaration or payment of certain distributions on or in
respect of Bioventus LLC's equity interests, restrictions on acquisitions,
investments and certain other payments, limitations on the incurrence of new
indebtedness, limitations on transfers, sales and other dispositions of assets
of Bioventus LLC and its subsidiaries, as well as limitations on making changes
to the business and organizational documents of Bioventus LLC and its
subsidiaries. Financial covenant requirements include (i) a maximum debt
leverage ratio of not greater than 4.75 to 1.00, decreasing to 4.50 to 1.00
commencing with the testing for the fiscal quarter ending December 31, 2023,
decreasing to 4.25 to 1.00 commencing with the testing for the fiscal quarter
ending June 30, 2024, and decreasing to 4.00 to 1.00 commencing with the testing
for the fiscal quarter ending December 31, 2024, and, beginning with the fiscal
quarter ending December 31, 2024, to be subject to a temporary increase to 4.50
to 1.00 upon certain events, and (ii) an interest coverage ratio not less than
2.25 to 1.00, increasing to 3.00 to 1.00 commencing with the fiscal quarter
ending December 31, 2024. The Third Amended Credit Agreement includes exceptions
to the negative covenants for the incurrence of indebtedness and liens in
respect of the Deferred Amount (as defined below) and the payment of the
Deferred Amount on the due dates thereof.
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The foregoing summary is qualified in its entirety by reference to the Third
Amendment, which is attached hereto as an Exhibit 10.1. The Third Amendment and
the Third Amended Credit Agreement is not intended to be a source of factual,
business or operational information about the Company or its subsidiaries. The
representations, warranties and covenants contained in the Third Amendment and
the Third Amended Credit Agreement were made only for purposes of such
agreements and as of specific dates, were solely for the benefit of the parties
to such agreements, and may be subject to limitations agreed upon by the
parties, including being qualified by disclosures for the purpose of allocating
contractual risk between the parties instead of establishing matters as facts;
and may be subject to standards of materiality applicable to the contracting
parties that differ from those applicable to investors or security holders.
Accordingly, investors should not rely on the representations, warranties and
covenants or any descriptions thereof as characterizations of the actual state
of facts or condition of the parties. Moreover, information concerning the
subject matter of the representations, warranties and covenants may change after
the date of the Third Amendment, which subsequent information may or may not be
fully reflected in the Company's public disclosures.
Item 2.01 Completion of Acquisition or Disposition of Assets.
As previously disclosed, Bioventus LLC entered into an Option and Equity
Purchase Agreement, dated July 15, 2020 (as amended via the previously disclosed
amendment entered into on June 17, 2022, the "Option Agreement"), with
CartiHeal, Elron Ventures Ltd. and ESOP Management and Trust Services Ltd. As
previously disclosed, pursuant to the Option Agreement, Bioventus LLC exercised
its call option to acquire 100% of CartiHeal's shares from the CartiHeal
shareholders (the "Sellers") for an aggregate purchase price of approximately
$315 million and an additional $135 million becoming payable after closing upon
achievement of certain sales milestones. The CartiHeal Acquisition closed on
July 12, 2022.
Pursuant to the Option Agreement, the Company previously deposited $50.0 million
into escrow as consideration for the CartiHeal Acquisition. At the closing, the
Company paid the Sellers an aggregate up-front payment of $100 million
(inclusive of the $50 million previously deposited into escrow by the Company
and $50.0 million from the new 2022-1 Term Loans described in Item 1.01 above).
The Company also paid approximately $8 million of CartiHeal's
transaction-related fees and expenses.
As previously disclosed, the Company will defer $215 million of the
consideration payable at closing to the Sellers (the "Deferred Amount") until
the earlier of the achievement of certain milestones and the occurrence of
certain installment payment dates. The Deferred Amount will be paid in five
tranches commencing in 2023 and ending no later than 2027. Item 2.03 Creation of
a Direct Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement of a Registrant.
The information set forth in Item 1.01 above with respect to the Third Amendment
is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired
The Company intends to file the financial statements required by Item 9.01(a) as
part of an amendment to this Current Report on Form 8-K no later than 71
calendar days after the required filing date for this Current Report on Form
8-K.
(b) Pro Forma Financial Information
The Company intends to file the pro forma financial information required by Item
9.01(b) as an amendment to this Current Report on Form 8-K no later than 71 days
after the required filing date for this Current Report on Form 8-K.
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(d) Exhibits:
Exhibit No. Description
10.1 Amendment No. 3 to Credit and Guaranty Agreement between Bioventus LLC,
Wells Fargo Bank, National Association, as administrative agent and
collateral agent, and the lenders and other financial institutions party
thereto, dated July 11, 2022.
104 Cover Page Interactive Data File (the cover page XBRL tags are embedded
within the Inline XBRL document)© Edgar Online, source Glimpses
BIOVENTUS INC. 
