BLP advises Oaktree Capital Management in granting a US$225 financing facility to Establishment Labs

Establishment Labs Holdings Inc. (NASDAQ: ESTA), a medical technology company focused on women’s health, initially in the breast aesthetics and reconstruction market, today announced that it has entered into a $225 million term loan financing facility with funds managed by Oaktree Capital Management, L.P. (“Oaktree”).

BLP advised its client Oaktree Capital Management on all aspects of the transaction, including its closing. Oaktree is a leader among global investment managers specializing in alternative investments.

According to Establishment Labs, this transaction will allow the business to be financed to generate a positive cash flow while helping enter the United States and China markets, supporting the sale of products worldwide, and allowing the expansion of its production center in Costa Rica.

The term loan facility will be available to Establishment Labs under the following terms:

• A senior secured term loan of up to $225 million. The facility will mature in five years from funding and is interest-only. Proceeds from the first tranche of the facility will be used to retire the company’s current term loan, fund the construction of the new Sulàyöm Innovation Campus in Costa Rica, and general corporate purposes and working capital.

• Interest will accrue at a fixed rate of 9.00% per annum and will step down to 8.25% upon the funding conditions for the fourth tranche being met. Establishment Labs can elect to PIK up to two-thirds of cash interest payments for the first 24 months of the loan term, resulting in a minimum initial cash interest rate of 3.00%.

• The first tranche (Tranche A) of $150 million will be drawn immediately, with the remaining three tranches of $25 million each available upon the achievement of certain commercial and regulatory milestones:
  • Tranche B of $25 million available before September 30, 2023, and upon trailing twelve-month product net sales exceeding $145 million.
  • Tranche C of $25 million available before March 31, 2024, and upon either trailing twelve-month product net sales exceeding $185 million or upon FDA approval of certain Motiva implants for use in the U.S., whichever is achieved earlier.
  • Tranche D of $25 million available before December 31, 2024, and upon both trailing twelve-month product net sales exceeding $225 million and FDA approval of certain Motiva implants for use in the U.S.

The BLP team in this transaction was led by: