AngioDynamics Inc.’s (ANGO) recently announced its decision to refinance its long-term debt and amend credit facilities to lower interest expenses. This should boost investor confidence and help to maintain the positive trend demonstrated by the company’s stock over the last couple of weeks.
As per the new credit facility, JPMorgan Chase (the lead bank in the transaction), along with co-arrangers Bank of America and Key Bank, have entered into a loan agreement with AngioDynamics. The credit facility includes 2 parts - a $100 million Term Loan and a $100 million revolving line of credit. With the new debt facilities, the company will retire all existing loans.
The new debt facility will reduce ANGO’s interest rate on its credit facility up to 75 basis points, which in turn will lower interest expense by more than $1 million annually. Moreover, the company will also be able to strengthen its balance sheet by improving its future cash flow.
We believe that this amendment in the credit facility coupled with debt refinancing will strengthen the financial position of AngioDynamics and assist it to capitalize on forthcoming growth opportunities. We also applaud management’s initiative to take advantage of the favorable debt market conditions in an effort to control expenses in a difficult macro economic environment.
ANGO ended the fourth quarter of fiscal 2013 with cash and cash equivalents and marketable securities of $24.0 million, down 36.3% from $37.6 million as of May 31, 2012. Total long-term debt (including current portion) was $142.5 million, down 5% from $150.0 million as of May 31, 2012. The company generated cash from operations of $10.8 million and $7 million of free cash flow in the fourth quarter.
Currently, AngioDynamics retains a Zacks Rank #3 (Hold). While we prefer to remain on the sidelines about ANGO, other medical instrument companies such as Varian Medical Systems (VAR), Given Imaging (GIVN) and Luminex Corp. (LMNX) warrant a look. All these stocks carry a Zacks Rank #2 (Buy).