Emergent BioSolutions Announces Closing of $100 Million Asset-Backed Loan Facility

Rhea-AI Summary

Emergent BioSolutions Inc. (NYSE: EBS) has announced the closing of a new $100 million asset-backed loan facility (ABL) on September 30, 2024. The credit agreement, with Wells Fargo Bank as the administrative agent, provides revolving loan commitments with a maturity date of September 30, 2029, subject to early maturity triggers. This new facility adds to Emergent's liquidity, supporting its multi-year transformation plan. As of September 30, 2024, Emergent had a cash balance of approximately $150 million and undrawn access to the full $100 million ABL.

Joe Papa, president and CEO of Emergent, stated that the new ABL credit facility with favorable terms and extended maturity demonstrates the company's strengthened balance sheet and financial position. This agreement follows Emergent's recent refinancing of its debt, including a new credit facility agreement with Oak Hill Advisors for a term loan of up to $250 million announced on September 3, 2024.

Positive

• Secured a new $100 million asset-backed loan facility
• Extended maturity date to September 30, 2029
• Cash balance of approximately $150 million as of September 30, 2024
• Undrawn access to $100 million under the new ABL
• Successfully refinanced debt with a new $250 million term loan agreement

Negative

• None.

Insights

Financial Analyst

Emergent BioSolutions' new $100 million asset-backed loan facility (ABL) is a significant development, enhancing the company's liquidity position. This ABL, combined with their existing $150 million cash balance, provides a total liquidity of $250 million. The five-year maturity until 2029 offers long-term financial stability. Notably, this follows a recent $250 million term loan agreement, indicating a comprehensive refinancing strategy. The improved financial flexibility should support Emergent's transformation plans and potentially fuel growth initiatives. However, investors should monitor the company's ability to generate sufficient cash flow to service this increased debt load. The market's reaction will likely be positive, as enhanced liquidity often reduces short-term financial risks for pharmaceutical companies engaged in capital-intensive R&D and production processes.

Corporate Restructuring Specialist

Emergent BioSolutions' new credit facility is a important component of its multi-year transformation plan. The ABL's structure, based on a borrowing base, suggests a focus on optimizing working capital and asset utilization. This approach typically allows for more flexible borrowing compared to traditional term loans. The successful closing of this facility, along with the earlier $250 million term loan, indicates creditor confidence in Emergent's turnaround strategy. The extended maturity to 2029 provides a stable financial runway for implementing strategic initiatives. However, the early maturity triggers linked to other indebtedness warrant careful debt management. Investors should view this as a positive step in Emergent's stabilization efforts, but should also closely monitor the company's progress in executing its transformation plan and achieving operational improvements to ensure long-term sustainability.

GAITHERSBURG, Md., Oct. 02, 2024 (GLOBE NEWSWIRE) -- Emergent BioSolutions Inc. (NYSE: EBS) announced today that it entered into a new credit agreement on September 30, 2024 providing for an asset-based revolving loan facility (ABL) with the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent. The credit agreement provides for revolving loan commitments in an aggregate principal amount up to $100 million (availability is based on a borrowing base set forth therein) with a fixed maturity date of September 30, 2029, subject to early maturity triggers based on the maturity of its other material indebtedness. The new credit facility brings additional liquidity to support Emergent’s multi-year transformation plan. As of September 30, 2024, Emergent had a cash balance of approximately $150 million and undrawn access to $100 million under the ABL.

“We are pleased to have successfully closed on our new ABL credit facility with favorable terms and an extended maturity, which is further evidence of Emergent’s strengthened balance sheet and financial position,” said Joe Papa, president and CEO, Emergent. “As we continue to execute on our multi-year transformation plan, we have made significant progress on our stabilization efforts to date, all while staying the course on strategic goals, to deliver long-term value and sustainable growth in the future.”

This agreement follows Emergent’s September 3, 2024 announcement that it successfully refinanced its debt and closed a new credit facility agreement with Oak Hill Advisors for a term loan of up to $250 million.

About Emergent BioSolutions
At Emergent, our mission is to protect and enhance life. For 25 years, we’ve been at work defending people from things we hope will never happen—so we are prepared just in case they ever do. We provide solutions for complex and urgent public health threats through a portfolio of vaccines and therapeutics that we develop and manufacture for governments and consumers. We also offer a range of integrated contract development and manufacturing services for pharmaceutical and biotechnology customers. To learn more about how we help protect public health, visit our website and follow us on LinkedIn, X, Instagram, Apple Podcasts and Spotify.

Safe Harbor Statement
This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, are forward-looking statements. We generally identify forward-looking statements by using words like “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “future,” “goal,” “intend,” “may,” “plan,” “position,” “possible,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would,” and similar expressions or variations thereof, or the negative thereof, but these terms are not the exclusive means of identifying such statements. Forward-looking statements are based on our current intentions, beliefs and expectations regarding future events based on information that is currently available. We cannot guarantee that any forward-looking statements will be accurate. Readers should realize that if underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual results could differ materially from our expectations. Readers are, therefore, cautioned not to place undue reliance on any forward-looking statements. Any forward-looking statement speaks only as of the date of this press release, and, except as required by law, we do not undertake any obligation to update any forward-looking statement to reflect new information, events or circumstances.

There are a number of important factors that could cause the company’s actual results to differ materially from those indicated by any forward-looking statements. Readers should consider this cautionary statement, as well as the risk factors and other disclosures included in our periodic reports filed with the U.S. Securities and Exchange Commission, when evaluating our forward-looking statements.

Investor Contact:
Richard S. Lindahl
Executive Vice President, CFO
lindahlr@ebsi.com

Media Contact:
Assal Hellmer
Vice President, Communications
mediarelations@ebsi.com

FAQ

What is the size of Emergent BioSolutions' (EBS) new asset-backed loan facility?

Emergent BioSolutions (EBS) has secured a new asset-backed loan facility (ABL) with an aggregate principal amount of up to $100 million.

When does Emergent BioSolutions' (EBS) new credit facility mature?

The new credit facility for Emergent BioSolutions (EBS) has a fixed maturity date of September 30, 2029, subject to early maturity triggers based on the maturity of its other material indebtedness.

What was Emergent BioSolutions' (EBS) cash balance as of September 30, 2024?

As of September 30, 2024, Emergent BioSolutions (EBS) had a cash balance of approximately $150 million.

How much additional liquidity does the new ABL provide to Emergent BioSolutions (EBS)?

The new asset-backed loan facility (ABL) provides Emergent BioSolutions (EBS) with undrawn access to $100 million in additional liquidity.