Varex Imaging announced it will redeem all of its outstanding 7.875% senior secured notes due October 15 2027, a principal amount of $368 million. The redemption will be executed at 101.969% of principal plus accrued interest, equating to $1,052.72125 per $1,000 of principal, and is scheduled for March 16 2026.
The company will fund the redemption with cash on hand and a new credit facility, referred to as “New Financing,” which includes an undrawn revolver of $155 million. The transaction will reduce net debt by $368 million, bringing net debt to roughly $212.4 million and net debt‑to‑EBITDA to 2.3, thereby improving leverage ratios.
The notes were originally issued in 2021, and a partial redemption of $30 million was completed in July 2021. The current redemption represents about 92% of Varex’s total debt of $401 million as of the last quarter, underscoring the scale of the debt reduction.
By eliminating future interest obligations and associated covenants, Varex gains greater financial flexibility for capital expenditures and potential acquisitions. The move signals confidence in the company’s cash‑flow generation and its ability to service debt without external financing.
The redemption aligns with Varex’s broader strategy of strengthening its balance sheet while supporting growth initiatives in its medical and industrial segments. The company has been investing in photon‑counting detector technology and expanding manufacturing capacity in India, initiatives that require a solid debt profile.
S&P Global Ratings had revised Varex’s outlook to negative in December 2024, citing elevated credit metrics and concerns about sustained leverage above 3.5×. The redemption is expected to address those concerns and could improve the company’s credit profile.
The redemption also follows a series of debt‑management actions, including a $200 million repayment of convertible notes in June 2025 and the July 2021 partial redemption. The cumulative effect is a more favorable debt structure that supports the company’s long‑term strategic goals.
The content on EveryTicker is for informational purposes only and should not be construed as financial or investment advice. We are not financial advisors. Consult with a qualified professional before making any investment decisions. Any actions you take based on information from this site are solely at your own risk.