Accuray entered into a new five-year $80 million term loan and $40 million revolving credit facility with Silicon Valley Bank and a syndicate of banks. The closing and funding of the new credit facility is subject to customary conditions precedent that are anticipated to be satisfied after the date hereof. The proceeds from the new credit facility, plus available cash on hand, are anticipated to be used to repay all outstanding borrowings under the Company's existing term loan and revolving credit facility with MidCap Financial (the "Refinanced Credit Facilities"). The new revolving credit facility, $25 million of which is anticipated to be drawn at closing, can be used for working capital, other general corporate purposes and for other permitted uses. Relative to the Refinanced Credit Facilities, the New Credit Facility significantly reduces borrowing costs while increasing operating flexibility through less restrictive financial covenants and access to higher levels of revolver borrowings.
"We are pleased with the successful execution of our new credit facility," said Shig Hamamatsu, Senior Vice President and Chief Financial Officer. "We have capitalized on the recent momentum in our business to significantly reduce our cost of debt, further strengthening our balance sheet, extending our maturities and providing additional financial flexibility and liquidity. The new credit facility further improves our capital structure."
Borrowings under the New Credit Facility will bear a floating rate of interest with a LIBOR margin of between 2.50% and 3.25%, which compares favorably to a LIBOR margin of between 3.50% to 6.75% under the Refinanced Credit Facilities. The New Credit Facility is subject to customary financial covenants and will mature approximately five years from closing.
Silicon Valley Bank acted as administrative agent and sole bookrunner for the New Credit Facility. The New Credit Facility is comprised of three total participants, including Silicon Valley Bank, HSBC Bank USA, N.A. and Comerica Bank.