ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On October 13, 2021, DexCom, Inc. (“DexCom”) entered into a Second Amended and Restated Credit Agreement (the “Amended Credit Agreement”) with JPMorgan Chase Bank, N.A. (“JPMorgan”), as administrative agent, Bank of America N.A., Silicon Valley Bank, UniCredit Bank AG, New York Branch, and Santander Bank, N.A., amending and restating that certain Amended and Restated Credit Agreement (the “Existing Credit Agreement”) dated December 19, 2018, as amended by that Amendment No.1 to Credit Agreement dated May 11, 2020 by and among DexCom, JPMorgan, as administrative agent, Bank of America N.A., Silicon Valley Bank, Bank of the West, and MUFG Union Bank, N.A.
The Amended Credit Agreement provides for a $200.0 million revolving credit agreement, and a subfacility of up to $25.0 million for letters of credit. As of October 13, 2021, DexCom had no outstanding loans under the Existing Credit Agreement and $6.4 million in outstanding letters of credit.
The revolving loans under the Amended Credit Agreement will be available for general corporate purposes, including working capital and capital expenditures. In addition to allowing borrowings in US dollars, the Amended Credit Agreement provides a $50.0 million sublimit for borrowings in Canadian Dollars, Euros, British Pounds, Swedish Kroner, Japanese Yen, Australian Dollars, New Zealand Dollars and any other currency that is subsequently approved by JPMorgan and each lender. Subject to customary conditions and the approval of any lender whose commitment would be increased, DexCom has the option to increase the maximum principal amount available under the Amended Credit Agreement by up to an additional $300.0 million, resulting in a maximum available principal amount under the Amended Credit Agreement of $500.0 million. However, none of the lenders has committed at this time to provide any such increase in their commitments.
The revolving loans under the Amended Credit Agreement bear interest at one of three base rates plus an applicable margin based on DexCom’s leverage ratio from time to time ranging from 0.375% to 1.000% (in the case of alternative base rate loans), from 1.375% to 2.000% (in the case of any Term Benchmark loans) or from 1.375% + 0.0326% to 2.000% + 0.0326% (in the case of any daily simple RFR loans, which are denominated in British pounds). The base rate is an alternative base rate equal to the highest of (i) the rate of interest per annum publicly quoted by The Wall Street Journal as the “Prime Rate” in the U.S., (ii) the greater of (A) the federal funds effective rate and (B) the overnight bank funding rate (as determined by the Federal Reserve Bank of New York) plus 0.5%, or (iii) a LIBOR-based rate plus 1%. DexCom will also pay a commitment fee of between 0.175% and 0.250%, payable quarterly in arrears, on the average daily unused amount of the revolving facility based on DexCom’s leverage ratio from time to time.
The obligations of DexCom under the Amended Credit Agreement are guaranteed by DexCom’s future wholly-owned domestic material subsidiaries, if any, and are secured by a first-priority security interest in substantially all of the assets of DexCom and the guarantors, including all or a portion of the equity interests of DexCom’s domestic subsidiaries and first-tier foreign subsidiaries but excluding real property and intellectual property (which is subject to a negative pledge).
The Amended Credit Agreement contains customary representations, warranties and ongoing affirmative and negative covenants and agreements. The negative covenants include, among other things, limitations on certain indebtedness, liens, investments, transactions with affiliates, dividends and other restricted payments, subordinated indebtedness and amendments to subordinated indebtedness documents and sale and leaseback transactions of DexCom or any of its domestic subsidiaries. The Amended Credit Agreement also requires DexCom to maintain a maximum senior secured leverage ratio and minimum fixed charge coverage ratio.
The Amended Credit Agreement also contains usual and customary events of default, which include: non-payment of principal, interest, fees and other amounts; material breach of a representation or warranty; non-performance of covenants and obligations; default on other material debt; bankruptcy or insolvency; material undischarged judgments; incurrence of certain material ERISA liabilities; and a change of control of DexCom.
The Amended Credit Agreement matures on October 13, 2026, the fifth anniversary of the effective date of the Amended Credit Agreement. On the maturity date, the full balance of the revolving loans and all other obligations under the Amended Credit Agreement must be paid at that time.
