ACCURAY INCORPORATED (NASDAQ:ARAY) Files An 8-K Entry into a Material Definitive Agreement

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ACCURAY INCORPORATED (NASDAQ:ARAY) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive Agreement.

Entry into Term Loan Agreement

On December15, 2017, Accuray Incorporated (the “Company”) entered into a credit and security agreement (the “Term Loan Agreement”) by and among the Company, as borrower, TomoTherapy Incorporated, a direct, wholly-owned subsidiary of the Company, as borrower (“TomoTherapy,” and together with the Company, the “Borrowers”), any additional borrower that may be added thereto, MidCap Financial Trust (“MidCap”), individually as a lender and as agent, and the other lenders from time to time parties thereto.

The Term Loan Agreement provides for an initial term loan of $40 million, which was funded on December15, 2017, with an additional tranche of $20 million, which may be borrowed if specified conditions are met on or prior to December31, 2018 (together, the Term Loan Facility”). The Company used a portion of the net proceeds from the initial advance under the Term Loan Facility to repay a portion of the outstanding borrowings under the Revolving Facility (as defined and described below).

Interest on the borrowings under the Term Loan Facility is payable monthly in arrears at an annual interest rate of reserve-adjusted, 90-day LIBOR (subject to a 1.00% floor) plus 6.75%. Principal of borrowings under the Term Loan Facility is payable in 36 equal monthly installments beginning on January1, 2020. The amortization of the principal amount may be recalculated for 24 equal monthly installments beginning on January1, 2021 if certain net revenue targets are met and no event of default under the Term Loan Facility has occurred and is continuing. The Term Loan Facility’s stated maturity date is December15, 2022, but the Term Loan Facility may mature earlier than the stated maturity date if certain conditions set forth in the Term Loan Agreement are not met, including conditions related to the Company’s two series of convertible notes maturing February1, 2018 and the Company’s convertible notes due 2022.

If all or a portion of any advance under the Term Loan Facility is prepaid, subject to certain exceptions, the Company will be required to pay a fee equal to 3% of the prepayment amount if such termination occurs within the first year of the funding of such advance, 2% of the prepayment amount if such termination occurs within the second year, and 1% of the prepayment amount if such termination occurs within the third year.

Amendment of Revolving Credit Agreement

On December15, 2017, the Company also entered into an amendment (the “Amendment”) of its credit and security agreement dated as of June14, 2017 (as so amended, the “Revolving Credit Agreement”) by and among the Borrowers, any additional borrower that may be added thereto, Midcap Funding IV Trust (“Midcap Funding”), individually as a lender and as agent (the “Revolving Agent”), and the other lenders from time to time parties thereto (together with MidCap Funding as a lender, the “Revolving Lenders”). The Revolving Credit Agreement initially provided for a revolving credit facility in the initial amount of $52 million, which the Company could request be increased by up to $33 million (the “Revolving Facility”). The Amendment, among other things, reduces the Revolving Facility to $32 million, of which $29 million was outstanding as of December15, 2017 (after giving effect to the repayment of a portion of the outstanding borrowings under the Revolving Facility with a portion of the net proceeds of the advance under the Term Loan Facility) and eliminates the potential $33 million increase of the Revolving Facility. Availability for borrowings under the Revolving Facility is subject to a borrowing base that is calculated as a function of the value of the Borrowers’ eligible accounts receivable and eligible inventory, and the Borrowers are required to maintain a minimum drawn balance of at least 30% of such availability.

The Amendment extends the Revolving Facility’s stated maturity date to December15, 2022, but the Revolving Facility may mature earlier than the stated maturity date if certain conditions set forth in the Revolving Credit Agreement are not met, including conditions related to the Company’s two series of convertible notes maturing February1, 2018 and the Company’s convertible notes due 2022.

Interest on the borrowings under the Revolving Facility is payable monthly in arrears at an annual interest rate of reserve-adjusted, 90-day LIBOR (subject to a 1.00% floor) plus 4.50%.The Revolving Credit Agreement requires the Borrowers to pay the Revolving Agent a collateral management fee of 0.10% per month on the outstanding balance of the Facility.The Revolving Credit Agreement also requires the Borrowers to pay the Revolving Lenders an unused line fee equal to 0.5% per annum of the average unused portion of the Revolving Facility.If all or a portion of the Revolving Lenders’ funding obligations under the Revolving Credit Agreement, after giving effect to the Amendment, terminate for any reason other than as a result of a refinancing of 50% of the loans made under the Revolving Facility by the Revolving Agent and the Revolving Lenders, then the Company will be required to pay a fee equal to 3% of the commitment amount terminated if such termination occurs within the first year of the effective date of the Amendment, 2% of the commitment amount terminated if such termination occurs within the second year, and 1% of the commitment amount terminated if such termination occurs after the second year.

Collateral and Covenants

The Borrowers’ obligations under the Revolving Credit Agreement and the Term Loan Agreement are secured by first-priority liens on substantially all the assets of the Borrowers, subject to certain exceptions.

Each of the Term Loan Agreement and the Revolving Credit Agreement contains restrictions and covenants applicable to the Company and its subsidiaries. Among other requirements, the Company may not permit the Fixed Charge Coverage Ratio to be less than a specified ratio or minimum consolidated Net Revenue to be less than a specified amount (each as defined and set forth in the Term Loan Agreement and the Revolving Credit Agreement) for each fiscal quarter during the term of the Term Loan Facility and the Revolving Facility.

Each of the Term Loan Agreement and the Revolving Credit Agreement also contains customary covenants that limit, among other things, the ability of the Company and its subsidiaries to (i)incur indebtedness, (ii)incur liens on their property, (iii)pay dividends or make other distributions, (iv)sell their assets, (v)make certain loans or investments, (vi)merge or consolidate, (vii)voluntarily repay or prepay certain indebtedness and (viii)enter into transactions with affiliates, in each case subject to certain exceptions. Each of the Term Loan Agreement and the Revolving Credit Agreement contains customary representations and warranties and events of default.

The foregoing summary of the terms of the Term Loan Agreement and the Revolving Credit Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Term Loan Agreement and the Amendment, copies of which will be filed as exhibits to the Company’s Quarterly Report on Form10-Q for the quarter ending December31, 2017.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth above under Item 1.01 is hereby incorporated by reference into this Item 2.03.

Item 7.01 Regulation FD Disclosure.

On December21, 2017, the Company issued a press release announcing the Company’s entry into the Term Loan Agreement and the Amendment. The press release is furnished as Exhibit99.1 to this Current Report on Form8-K. In accordance with General Instruction B.2 of Form8-K, the information in Exhibit99.1 and in this Item shall not be deemed to be “filed” for purposes of Section18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(d)Exhibits


ACCURAY INC Exhibit
EX-99.1 2 a17-28766_1ex99d1.htm EX-99.1 Exhibit 99.1   Accuray Enters into $40 Million Term Loan; Company Intends to Retire Principal Amount of February 2018 Convertible Notes with Cash at Maturity   Company Also Modifies Revolving Loan Agreement   SUNNYVALE,…
To view the full exhibit click here

About ACCURAY INCORPORATED (NASDAQ:ARAY)

Accuray Incorporated is a radiation oncology company. The Company develops, manufactures and markets medical devices used in radiation therapy for the treatment of cancer patients. Its products include the CyberKnife Systems, the TomoTherapy Systems, and the Radixact Delivery Treatment Platform. Its technologies, the CyberKnife and TomoTherapy Systems, are designed to deliver treatments, including stereotactic radiosurgery (SRS), stereotactic body radiation therapy (SBRT), intensity modulated radiation therapy (IMRT), image guided radiation therapy (IGRT) and adaptive radiation therapy. The CyberKnife Systems are robotic systems that are used to treat various types of cancer and tumors throughout the body. The CyberKnife Systems track, detect and correct for tumor and patient movement in real-time during the procedure. The TomoTherapy Systems include the TomoTherapy H Series with configuration options of TomoH, TomoHD and TomoHDA.