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Investing.com -- Shares of Accuray Incorporated (NASDAQ:ARAY) plunged 19.4% as the medical device company announced a complex financing strategy that has raised concerns among investors. The company revealed plans to exchange $82.0 million principal amount of its 3.75% senior convertible notes due 2026 for approximately 8.88 million shares of its common stock, in addition to paying roughly $68.6 million in cash to the holders of the notes.
The exchange, slated for completion around June 11, 2025, is contingent on standard closing conditions. In tandem with this exchange, Accuray has entered into a new senior secured credit agreement, securing $150 million in new term loan facilities, a $20 million delayed draw term loan facility, and a $20 million revolving credit facility. The proceeds from these facilities, coupled with available cash, will be used to repay existing debt from a 2021 agreement with Silicon Valley Bank.
The financing agreement sets forth an interest rate at the borrower’s option, either a term SOFR-based rate with a 2.00% floor plus a margin of 8.50% or a base rate with a 3.00% floor plus a margin of 7.50%. Up to 6.00% of the interest may be paid in kind, potentially increasing the principal balance of the loans.
Accuray’s governance will also see changes, with the appointment of Steven F. Mayer to its Board of Directors as part of a governance agreement with TCW Asset Management Company LLC, the collateral agent and administrative agent for the lenders.
Suzanne Winter, president and CEO of Accuray, expressed optimism about the new financing agreement and its alignment with the company’s strategic priorities, which include transforming radiation therapy care and enhancing shareholder value. Winter praised the company’s expanded solution portfolio and anticipated that the new capital structure would improve liquidity and operational flexibility.
To further cement the financing agreement, Accuray has issued various warrants to the lenders, with exercise prices ranging from $0.01 to $1.68 and expiration dates in 2032. These warrants include anti-dilution provisions and are subject to certain registration rights.
This complex financial restructuring has clearly unsettled investors, as reflected in the significant drop in Accuray’s stock price. The company’s strategic moves aim to strengthen its financial position and support long-term growth, but the immediate market reaction suggests investor apprehension regarding the potential dilution of shares and the cost of the new capital.
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