Catalent Announces Closing of Incremental Term Loans

Rhea-AI Summary

Catalent, Inc. (NYSE: CTLT) announced a $600 million incremental term loan issuance to repay outstanding borrowings and strengthen its capital structure, increasing total liquidity to approximately $1.3 billion.

Insights

Financial Analyst

The recent financial maneuver by Catalent, Inc. involving the issuance of new incremental term loans amounting to $600 million is a strategic move that merits attention from investors and stakeholders. The upsizing of the loan, driven by strong lender demand, indicates a positive market perception of Catalent's creditworthiness and financial health.

In the short-term, this transaction enhances the company's liquidity, providing Catalent with a robust financial cushion. The repayment of the outstanding borrowings under the revolving credit facility and the increase in total liquidity to approximately $1.3 billion suggest a proactive approach to managing debt and improving the company's financial flexibility.

Long-term implications include potential benefits such as reduced pressure on cash flows due to the revolving credit facility's high-interest rates. However, stakeholders should also be aware of the possible increase in long-term liabilities that could affect future profitability. It is also essential to monitor how this additional liquidity will be utilized to support growth initiatives or further debt reduction.

Understanding the technicalities, a term loan is a loan from a bank for a specific amount that has a specified repayment schedule and a fixed or floating interest rate. By converting revolving credit, which is more flexible but often comes with higher interest rates, into a term loan, Catalent is opting for a more predictable debt structure.

Industry Analyst

This refinancing strategy employed by Catalent is not uncommon in the pharmaceutical and biotech industry, where companies often deal with large capital expenditures and fluctuating cash flows. The action taken by Catalent aligns with industry practices where businesses seek to optimize their capital structures in response to market conditions and internal financial goals.

It is noteworthy that Catalent's management emphasizes a prudent financial policy and the strengthening of the company's capital structure. This suggests a conservative approach to leverage and a focus on maintaining financial stability, which could be reassuring to investors concerned about the risks associated with high levels of debt.

Stakeholders should compare Catalent's financial ratios, such as debt-to-equity and interest coverage ratios, with industry benchmarks to assess the company's relative financial position. A comparison with peers could provide additional context to the company's financial strategy and its potential impact on business operations and competitiveness.

SOMERSET, N.J.--(BUSINESS WIRE)-- Catalent, Inc. (NYSE: CTLT), the leader in enabling the development and supply of better treatments for patients worldwide, announced today that its wholly owned subsidiary, Catalent Pharma Solutions, Inc., as borrower, and certain other wholly owned subsidiaries of Catalent, entered into an amendment, dated as of December 19, 2023, to its existing credit agreement for the issuance of new incremental term loans in an aggregate amount of $600 million, which was upsized due to very strong lender demand. The proceeds were used to repay a portion of the outstanding borrowings under Catalent’s revolving credit facility and to pay related fees and expenses.

“We are pleased to announce the successful outcome of our term loan transaction, which effectively terms-out a significant portion of our outstanding balance under the revolving credit facility,” said Matti Masanovich, Chief Financial Officer. “This action brings our total liquidity to approximately $1.3 billion and exemplifies our commitment and prioritization to a prudent financial policy, specifically the strengthening of our capital structure and liquidity position.”

About Catalent, Inc.

Catalent, Inc., is the global leader in enabling pharma, biotech, and consumer health partners to optimize product development, launch, and full life-cycle supply for patients around the world. With broad and deep scale and expertise in development sciences, delivery technologies, and multi-modality manufacturing, Catalent is a preferred industry partner for personalized medicines, consumer health brand extensions, and blockbuster drugs. Catalent helps accelerate over 1,500 partner programs and launch over 150 new products every year. Its flexible manufacturing platforms at over 50 global sites supply approximately 70 billion doses of nearly 8,000 products annually. Catalent’s expert workforce of nearly 18,000 includes more than 3,000 scientists and technicians. Headquartered in Somerset, New Jersey, the company generated nearly $4.3 billion in revenue in its 2023 fiscal year.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements. These forward-looking statements are based on management’s current expectations. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause actual future events, results or achievements to be materially different from Catalent’s expectations and projections expressed or implied by the forward-looking statements. Important factors include, but are not limited to, those discussed under the caption “Risk Factors” in Catalent’s Annual Report on Form 10-K for the year ended June 30, 2023, and Catalent’s other filings with the SEC. Forward-looking statements speak only as of the date of this press release and are based on information available to Catalent as of the date of this press release, and Catalent assumes no obligation to update such forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20231219865181/en/

Paul Surdez, Catalent, Inc.

(732) 537-6325

investors@catalent.com

Source: Catalent, Inc.

FAQ

What did Catalent, Inc. (NYSE: CTLT) announce?

Catalent, Inc. announced an amendment to its credit agreement for the issuance of new incremental term loans in the amount of $600 million.

How will the proceeds from the term loan issuance be used?

The proceeds were used to repay a portion of the outstanding borrowings under Catalent’s revolving credit facility and to pay related fees and expenses.

Who is the Chief Financial Officer of Catalent, Inc. (NYSE: CTLT)?

Matti Masanovich is the Chief Financial Officer of Catalent, Inc.

What is the total liquidity of Catalent, Inc. (NYSE: CTLT) after the term loan transaction?

The total liquidity of Catalent, Inc. is approximately $1.3 billion after the term loan transaction.