Theratechnologies Gains Financial Flexibility with New Loans

Theratechnologies Enhances Financial Stability

Theratechnologies Inc., known for its groundbreaking work in biopharmaceuticals, has recently taken a significant step toward strengthening its financial foundation. As part of its ongoing efforts to develop innovative therapies, the company has secured up to $75 million in new credit facilities, replacing its previous arrangements to optimize capital management.

Details of the New Credit Facilities

In a noteworthy transaction, Theratechnologies closed a $40 million three-year non-dilutive, senior secured syndicated financing with TD Bank, acting as the agent. This financing option includes a flexible $20 million accordion feature that allows for potential expansion of total commitments up to $60 million. Additionally, Investissement Québec, the company’s primary shareholder, has committed to provide a $15 million second-ranking secured subordinated term loan.

Use of Funds for Business Development

The capital raised through these new loan facilities, combined with the company's existing cash reserves, will be directed towards repaying prior obligations under the company’s former facility related to Marathon Asset Management. Furthermore, the funds will play a crucial role in supporting various business development initiatives aimed at propelling growth.

Financial Flexibility and Strategic Goals

Philippe Dubuc, Senior Vice President and Chief Financial Officer at Theratechnologies, emphasized the importance of this deal for the company’s strategic vision. He noted that the favorable terms and interest rates associated with the new credit facilities position the company to advance its acquisition strategy while significantly reducing costs. This financial maneuvering exemplifies Theratechnologies's commitment to enhancing profitability and ensuring long-term sustainability in a competitive market.

Key Highlights of TD Bank Financing

• A senior secured term loan valued at $25 million and a $15 million revolving credit facility, both featuring a floating interest rate tied to the company’s net debt-to-Adjusted EBITDA ratio.
• The initial interest rate is set at SOFR plus 2.75%, a notable improvement from the previous rate.
• The term loan amortizes over a seven-year horizon, maturing on November 27, 2027.
• Currently, $5 million has been drawn from the revolving credit facility to support ongoing operations.

Subordinated Loans and Their Significance

The IQ Subordinated Loan, valued at $15 million, also presents advantageous terms for Theratechnologies. The interest rate is pegged to US Government rates with an added margin, currently amounting to 11.45%. Importantly, this loan is structured to be interest-only for the initial 42 months before requiring full repayment, providing a buffer for the company as it aims to grow and solidify its market position.

Current Financial Position

After the new financing is accounted for, Theratechnologies anticipates a total debt of $45 million paired with an expected cash balance of approximately $20 million. This results in a manageable net debt level of around $25 million, strengthening the company's fiscal health.

About Theratechnologies

Theratechnologies (TSX: TH) (NASDAQ: THTX) remains dedicated to creating and bringing to market innovative therapies that address unmet medical needs. The firm’s commitment to research and development ensures it stays ahead in the biopharmaceutical landscape. More information about Theratechnologies can be found on their official website and through their public filings on various regulatory platforms.

Frequently Asked Questions

1. What is the total amount secured in the new credit facilities?

Theratechnologies has secured up to $75 million through its new financing arrangements.

2. How does this financing benefit Theratechnologies?

The financing will allow the company to repay prior obligations and fund business development initiatives while optimizing its capital structure.

3. Who provided the new loans?

TD Bank is the primary lender, backed by Investissement Québec as an additional source of funding.

4. What will the raised funds primarily be used for?

The funds will be used to repay existing loans and support various business development activities.

5. What is the importance of this financing for the company's strategy?

This financing is critical as it aligns with Theratechnologies's strategy to enhance profitability, support acquisitions, and secure long-term growth.

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