OHA is Administrative Agent and Sole Lender for Emergent BioSolutions Debt Refinancing

Rhea-AI Summary

Oak Hill Advisors (OHA) has provided a $250 million term loan facility to Emergent BioSolutions Inc. (NYSE: EBS), a global company specializing in life-saving products. This refinancing is a important step in Emergent's multi-year plan to stabilize its financial profile. As part of the deal, Emergent issued OHA 2.5 million warrants and common stock worth $10 million. The company aims to reduce net debt by over $200 million this year, positioning itself for future growth and investment opportunities. This bespoke financing structure showcases OHA's strategic approach to addressing complex financial situations, providing Emergent with additional liquidity and flexibility to execute its business plan.

Positive

• Secured $250 million term loan facility for debt refinancing
• On track to reduce net debt by over $200 million in 2024
• Gained additional liquidity and flexibility for future growth and investments
• Successful execution of multi-year financial stabilization plan

Negative

• Issuance of 2.5 million warrants and $10 million worth of common stock, potentially diluting existing shareholders

Insights

Financial Analyst

The $250 million term loan facility for Emergent BioSolutions marks a significant financial restructuring. This refinancing, coupled with the issuance of 2.5 million warrants and $10 million in common stock to OHA, demonstrates a complex financial arrangement aimed at stabilizing Emergent's financial profile. The company's goal to reduce net debt by over $200 million this year is substantial and could potentially improve its balance sheet strength. However, the issuance of warrants and stock suggests a dilutive impact on existing shareholders, which needs to be weighed against the benefits of the refinancing. The bespoke nature of this deal indicates Emergent's challenging financial position, requiring tailored solutions to address its debt burden.

Market Research Analyst

This refinancing deal comes at a crucial juncture for Emergent BioSolutions. The company's focus on life-saving products addressing public health threats positions it in a potentially growing market, given increasing global health concerns. However, the need for such extensive financial restructuring suggests underlying operational challenges. The market's reaction to this news will likely be mixed. While the debt refinancing provides stability, it also signals ongoing financial struggles. Investors should closely monitor Emergent's ability to leverage this financial breathing room into tangible operational improvements and growth in its core business areas. The success of this refinancing in facilitating Emergent's turnaround will be a key factor in determining the company's future market position and investor confidence.

Legal Expert

The structure of this refinancing deal presents several legal considerations. The issuance of warrants and common stock as part of the loan agreement introduces complex securities law implications. The method of calculating share numbers and warrant strike prices based on a future 30-day volume weighted average price adds a layer of financial and legal complexity. This structure may require careful scrutiny to ensure compliance with SEC regulations and NYSE listing requirements. Additionally, the role of OHA as both lender and potential equity holder through warrants creates a unique legal relationship that may impact future corporate governance decisions. Shareholders and potential investors should carefully review the Form 8-K filing to understand the full legal implications of this refinancing arrangement on their rights and the company's future capital structure.

New York, New York, Sept. 04, 2024 (GLOBE NEWSWIRE) -- Oak Hill Advisors (“OHA”) served as Administrative Agent and sole lender of a $250 million term loan facility supporting Emergent BioSolutions Inc. (“Emergent”) (NYSE: EBS), a global company providing life-saving and life-extending products that address public health threats. The new debt financing will refinance Emergent’s existing credit facility, reaching a significant step in its multi-year plan to stabilize its financial profile.

In connection with the execution of the term loan, Emergent issued OHA 2.5 million warrants in addition to common stock with an aggregate value of $10 million. Both the number of shares and the warrant strike prices will be calculated based on the volume weighted average price per share for the 30 trading days ending on, but excluding, the 10th business day following the closing date.

This bespoke term loan structure exemplifies OHA’s strategic approach to partnering with companies to address complex and unique financial situations.

“For the past 18 months, Emergent has executed on a series of actions to strengthen the balance sheet and streamline operations,” said Joe Papa, president and CEO of Emergent. “These steps, which include finalizing several asset/site divestitures, resolving legacy issues, and now, securing this significant debt refinancing, are critical to stabilizing our financial profile.”

Papa continued, “We are thrilled to secure this new credit facility with Oak Hill Advisors as we are on track to reduce net debt by more than $200 million this year, positioning Emergent to enter its next phase of our turnaround, enabling future growth and additional investment opportunities with much greater freedom and flexibility to operate through favorable terms.”

Joseph Goldschmid, Managing Director at Oak Hill Advisors, added, “We are delighted to be a capital partner to Emergent. This financing provides the company with additional liquidity and flexibility to deliver on its business plan and continue to provide critical, life-saving products. We are excited to support and partner with the management team and company in this next chapter of growth.”

To access more information related to the new credit facility agreement, visit Emergent’s recently filed Form 8-K and press release here.

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About OHA: Oak Hill Advisors (OHA) is a leading global credit-focused alternative asset manager with over 30 years of investment experience. OHA works with institutions and individuals and seeks to deliver a consistent track record of attractive risk-adjusted returns. The firm manages approximately $65 billion of capital across credit strategies, including private credit, high yield bonds, leveraged loans, stressed and distressed debt and collateralized loan obligations as of June 30, 2024. OHA’s emphasis on long-term partnerships with companies, sponsors and other partners provides access to a proprietary opportunity set, allowing for customized credit solutions across market cycles.

With over 400 experienced professionals across six global offices, OHA brings a collaborative approach to offering investors a single platform to meet their diverse credit needs. OHA is the private markets platform of T. Rowe Price Group, Inc. (NASDAQ – GS: TROW). For more information, please visit oakhilladvisors.com.

FAQ

What is the size of the term loan facility provided by Oak Hill Advisors to Emergent BioSolutions (EBS)?

Oak Hill Advisors provided a $250 million term loan facility to Emergent BioSolutions (NYSE: EBS).

How much net debt reduction does Emergent BioSolutions (EBS) expect in 2024?

Emergent BioSolutions (NYSE: EBS) is on track to reduce net debt by more than $200 million in 2024.

What additional securities did Emergent BioSolutions (EBS) issue to Oak Hill Advisors as part of the refinancing deal?

Emergent BioSolutions (NYSE: EBS) issued 2.5 million warrants and common stock with an aggregate value of $10 million to Oak Hill Advisors.

How does the new credit facility benefit Emergent BioSolutions (EBS)?

The new credit facility provides Emergent BioSolutions (NYSE: EBS) with additional liquidity and flexibility to deliver on its business plan, enabling future growth and investment opportunities.