Sotera Health Announces Closing of $1.5 Billion Term Loan B and $750 Million Senior Secured Note Financings
Sotera Health (Nasdaq: SHC) has announced the successful closing of a $1.51 billion Term Loan B and $750 million in senior secured notes, both maturing in 2031. The company will use the proceeds to refinance its existing $1.76 billion and $496.3 million Term Loan B facilities. This refinancing is expected to save approximately $5 million in interest expenses for 2024, reducing the projected interest expense to $165-175 million. Term Loan B offers a variable interest rate with options for SOFR-based or alternate base rate loans, and is prepayable without penalties after six months. The senior secured notes carry an interest rate of 7.375% per annum, payable semi-annually. This move is seen as favorable and reflects the market's confidence in Sotera Health's business strength.
- Refinancing of $1.76 billion and $496.3 million Term Loan B facilities successfully completed.
- Expected interest expense savings of approximately $5 million for 2024.
- Projected interest expense reduced to $165-175 million.
- Strong market reception for the financing indicates confidence in the company's business.
- Term Loan B is prepayable without premium or penalty after six months.
- Senior secured notes maturing in 2031, providing long-term financial stability.
- Term Loan B and senior secured notes increase the company's long-term debt burden.
- Variable interest rate on Term Loan B could result in higher interest costs if rates increase.
- Fixed interest rate of 7.375% on notes is relatively high, increasing overall borrowing costs.
Insights
Sotera Health's recent financial maneuver involves closing a significant $1.51 billion Term Loan B and $750 million Senior Secured Note financings to refinance existing debt. This is a noteworthy development, especially from a financial perspective, considering the potential for cost savings and improved debt structure.
First, the refinancing will deliver approximately
Moreover, the favorable terms of the new debt, with interest rates set at a variable rate plus a margin of
In the long term, the restructuring allows Sotera Health more financial flexibility with prepayment options and no penalties after six months. This opens up future opportunities for the company to refinance again if market conditions become even more favorable. However, it's essential to note that these financial benefits come with the obligation to meet covenants and guarantee requirements, which could pose risks if the company’s performance falters.
Overall, investors should view this refinancing as a positive step toward strengthening Sotera Health's balance sheet and improving financial stability.
From a market standpoint, Sotera Health's successful refinancing signals strong investor confidence in the company. The ability to secure
The healthcare sector, especially the sterilization and lab testing segment, is highly competitive and capital-intensive. By securing long-term financing at favorable terms, Sotera Health can continue to invest in innovation, expand its service offerings, or potentially explore strategic acquisitions without the immediate pressure of high-interest costs. This strategic financial positioning could translate into enhanced market share and sustained revenue growth, which are important for long-term investors.
However, investors should monitor how the company allocates the freed-up capital and whether these investments translate into tangible improvements in operational efficiency and market expansion. The healthcare industry is also subject to regulatory changes, which could impact future financial performance.
Nonetheless, the market's positive reception of the financing indicates optimism about Sotera Health's future prospects.
CLEVELAND, May 30, 2024 (GLOBE NEWSWIRE) -- Sotera Health Company (“Sotera Health” or the “Company”) (Nasdaq: SHC), a leading global provider of mission-critical end-to-end sterilization solutions and lab testing and advisory services for the healthcare industry, today announced that its direct subsidiary has successfully closed a new senior secured Term Loan B facility in an aggregate principal amount of
“We are pleased to announce the successful refinancing of our capital structure with a
The TLB was issued in connection with an amendment to the Company’s existing First Lien Credit Agreement and will bear interest at a variable rate per annum plus an applicable margin, at the Company's option, of either
The Notes will bear interest at a fixed rate of
About Sotera Health
Sotera Health Company is a leading global provider of mission-critical end-to-end sterilization solutions and lab testing and advisory services for the healthcare industry. Sotera Health goes to market through three businesses – Sterigenics®, Nordion® and Nelson Labs®. Sotera Health is committed to its mission, Safeguarding Global Health®.
Updates can be found from time to time on recent developments in matters relevant to investors on the Investor Relations section of the Company’s website at Investor Relations | Sotera Health.
Cautionary Note Regarding Forward-Looking Statements
Unless expressly indicated or the context requires otherwise, the terms “Sotera Health,” “Company,” “we,” “us,” and “our” in this document refer to Sotera Health Company, a Delaware corporation, and, where appropriate, its subsidiaries on a consolidated basis. This release contains forward-looking statements that reflect management’s expectations about future events and the Company’s operating plans and performance and speak only as of the date hereof. You can identify these forward-looking statements by the use of forward-looking words such as “will,” “may,” “plan,” “estimate,” “project,” “believe,” “anticipate,” “expect,” “intend,” “should,” “would,” “could,” “target,” “goal,” “continue to,” “positioned to,” “are confident” or the negative versions of those words or other comparable words. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances, are forward-looking statements. Any forward-looking statements contained in this release are based upon our historical performance and on our current plans, estimates and expectations of the Company’s future performance and the future performance of the markets in which the Company operates in light of information currently available to us. The inclusion of this forward-looking information should not be regarded as a representation by us that the future plans, estimates or expectations contemplated by us will be achieved. These forward-looking statements are subject to various risks, uncertainties and assumptions relating to our operations, financial results, financial condition, business, prospects, growth strategy and liquidity. These risks and uncertainties include, without limitation, any disruption in the availability or supply of, or increases in the price of ethylene oxide (“EO”) or Cobalt-60, or our other direct materials, services and supplies, including as a result of geopolitical instability and/or sanctions against Russia; fluctuations in foreign currency exchange rates; changes in industry trends, environmental, health and safety regulations or preferences, and general economic, social and business conditions; the impact and outcome of current and future legal proceedings and liability claims, including litigation related to use of EO and/or emission and releases of EO from our facilities in California, Georgia, Illinois and New Mexico and the possibility that other claims will be made in the future relating to these or other facilities; our ability to increase capacity at existing facilities, build new facilities in a timely and cost-effective manner and renew leases for our leased facilities; our ability to attract and retain qualified employees; the risks of doing business internationally, including global and regional economic and political instability and compliance with numerous and sometimes inconsistent laws and regulations in multiple jurisdictions; and an inability to pursue strategic transactions, find suitable acquisition targets, or integrate strategic acquisitions into our business successfully. For additional discussion of these risks and uncertainties, please refer to the Company’s filings with the SEC, such as its annual and quarterly reports. We do not undertake any obligation to publicly update or revise these forward-looking statements, except as otherwise required by law.
INVESTOR RELATIONS CONTACTS:
Jason Peterson
Vice President & Treasurer, Sotera Health
IR@soterahealth.com
MEDIA CONTACT:
Kristin Gibbs
Chief Marketing Officer, Sotera Health
kgibbs@soterahealth.com
Source: Sotera Health Company
FAQ
What is the total amount of financing Sotera Health secured?
When do the new financings mature?
How will the new financings impact Sotera Health's interest expenses?
What is the interest rate for the senior secured notes issued by Sotera Health?
What is the projected interest expense range for Sotera Health in 2024?
Can the Term Loan B be prepaid without penalties?
