CONMED recently secured a new $200 million facility through J.P. Morgan in order to refinance a $105 million credit set to expire in December. According to Robert Shallish Jr., cfo, the Utica, N.Y., surgical equipment company decided to refinance early because of the possibility that interest rates would be higher in December due to an influx of bank deals. "Word was that more deals are coming later in the year and the pricing would get worse," Shallish said.
The new facility is split between a five-year, $100 million revolver and a five-year, $100 million "B" term loan priced at LIBOR plus 21/ 2% and LIBOR plus 23/ 4%, respectively. Shallish said he was "not happy" with the pricing CONMED received, but he added that it was acceptable given the current state of the economy. The new facility is secured by most of the company's assets except accounts receivable, he noted.
CONMED's previous credit, which also was led by J.P. Morgan, initially was a $490 million facility consisting of a revolver and three term loans, much of which was used to finance the company's acquisition of Minnesota Mining and Manufacturing's powered surgical instrument business in 1999. CONMED subsequently paid down a considerable portion of that debt, leaving just $49 million in term loans and $56 million outstanding on the revolver before refinancing began. Shallish noted that the bulk of the remaining debt has been replaced by the new "B" piece.