- Existing $400 million facility prepaid at a $68 million discount to the contractual minimum repayment amount
- New $400 million term loan priced at SOFR plus 5.50%
- Debt has no scheduled amortization payments or required sweeps during the term prior to the Maturity Date of November 2, 2031
Arrowhead Pharmaceuticals, Inc. (NASDAQ:ARWR) today announced that it has completed a refinancing with funds managed by Sixth Street that lowers its borrowing costs, improves near-term liquidity, extends its debt maturity, and increases financial and operational flexibility. The transaction retires Arrowhead’s existing $400 million Sixth Street facility at a $68 million discount to the contractual minimum repayment amount and establishes a new $400 million Sixth Street senior secured term loan facility bearing interest at the Secured Overnight Financing Rate (SOFR) plus 5.50%.
Transaction Highlights
- Lower borrowing costs. The new facility carries an interest rate of SOFR plus 5.50%, compared to an annual rate of 15% in the retired facility.
- Reduced minimum prepayment multiple. Negotiated a $68 million discount on the contractual prepayment amount on the retired facility, which originally carried a minimum 2x multiple on invested capital (MOIC) if paid in full by August 2028 and escalated to a 2.5x MOIC thereafter.
- Reduced contractual sweep obligation. The retired facility required Arrowhead to partially repay loans under the credit facility with a sweep of a portion of the proceeds from certain transactions, such as the future collection of upfront payments, milestones, and royalties from partnerships and collaborations, and commercial revenue by Arrowhead. The new facility eliminates these required prepayments or sweeps and reduces the prepayment premiums associated with paying off the facility early.
- Greater strategic, financial, and operational flexibility. The new facility significantly improves Arrowhead’s ability to independently engage in strategic, financial, and operational activities.
- Extended maturity enhancing near-term liquidity. The new facility matures in November 2031.