Alphatec Downsizes in France; Expands U.S. Credit Facility
Alphatec Holdings Inc., parent company of Alphatec Spine, is reorganizing its French affiliate. The process to significantly restructure business operations Scient’x SAS and its subsidiary Surgiview SAS is already underway. This restructuring plan, when completed in accordance with French laws, is expected to reduce Scient’x’s workforce by 76 positions in total. Alphatex officials also said restructuring will reduce operating expenditures between $2 million to $6 million on an annualized basis and is part of the company’s strategy to streamline the organization and lowering cost structures, with an expectation to improve its profitability in 2014 and thereafter.
“The decision to begin the process of restructuring our operations in France was very difficult but ultimately was based on the management team undertaking a thorough analysis of the current and future market environment and Scient’x’s ability to remain competitive while meeting our customers’ needs with the best and most affordable solutions,” said Les Cross, chairman and CEO of Alphatec Spine. “Upon completion, this restructuring should leverage Alphatec Spine’s current global investment in manufacturing, infrastructure, and sales distribution capacity, while still providing Scient’x’s customers, distributors, and suppliers with immediate and long-term benefits.”
This restructuring plan is hoped to result in multi-year reductions in operating expense, yielding improvements in international gross margins and increasing overall operating margins. Alphatec Holdings would incur one-time restructuring costs associated with the implementation of this plan consisting primarily of transition, severance and other costs related to work force reductions.
“We appreciate the significant contributions of those employees who could be impacted by this plan and their dedication to Scient’x and their customers,” added Cross. “We will do everything possible to assist all affected employees and their families.”
In further efforts to increase its liquidity, Alphatec Spine has negotiated an increased credit facility with MidCap Financial, a Bethesda, Md.-based commercial finance company focused on middle market lending in the broader U.S. healthcare industry. The revised credit facility increases Alphatec Spine’s current financing capability by providing access to up to an aggregate maximum amount of $73 million. It also gives Alphatec Spine a $40 million revolving line of credit supported by a $33 million term loan, which is due July 2016. The amended credit facility will be used to support the Alphatec Spine’s general operational purposes and working capital needs.
Cross said the updated credit agreement provides the company with additional flexibility, positioning Alphatec Spine well to continue to fund its “ongoing operational and commercial activities” as well as providing “additional capacity for future accretive transactions.”
“We have enjoyed partnering with Alphatec Spine since the origination of the initial credit facility that we established in June 2012,” said Matt Pappano, vice president-portfolio manager at MidCap Financial. “Over the last 15 months we have been very pleased to see the company’s continued growth and positive performance of the business. We’re delighted to further assist Alphatec Spine in continuing to deliver their business objectives by now providing the company with additional flexible capital.”
Carlsbad, Calif.-based Alphatec Spine makes technology for the treatment of spinal disorders associated with trauma, congenital deformities, disease and degeneration.
Scient’x, based in Paris, makes a range of spine devices including fusion and non-fusion implants, devices for aging spine disease, minimally invasive spine devices and osteosynthesis systems.