As we expected the pricing was pretty much in line with our expectations. So you may have seen on Bloomberg made it was software plus 550 basis points. That’s a couple 100, 200 basis points over the existing loans. So that was within our expectations. So that leads to about $50 million of increase in interest expense, which the unwinding of BPC, I spoke about will more than offset that increase. So from an overall cash perspective that increase in interest expense, which we fully expect will be more than offset by our change in corporate structure, which will save us about $60 million plus year-over-year. In terms of covenants and so forth, there is nothing kind of big material changes that I can fully recall. And the final thing I would mention is as we need to keep in mind that our interest expense growth is limited, partially because a 3 billion of our debt is fixed.
So we have a swap in place, we were able to amend that swap to kind of reduce our interest expense associated with this refinancing. So, a great outcome from our perspective. I’m going to thank both our existing lenders into our term loan for being supportive and working with us over the last few months, because as we know the capital markets held be pretty choppy.
Leszek Sulewski: Great. Thank you.
Operator: Thank you, Les. We will now take our next question from Nathan Rich from Goldman Sachs. Your line is now open. Please go ahead.
Unidentified Analyst: Hi. Good morning. This is Sarah on for Nate. Thank you so much for taking our question. I first wanted to start on the new corporate structure and the cash flow implications. Can you just talk about the peak expected restructuring savings and also the time line to realize these synergies?
Tasos Konidaris: Sure. Good morning, Sarah. So, as people know in this room, it took us a couple of years to kind of fully get our ramps around the legacy structure and really finding the best way that works for all our shareholders. So number one is, we expect to effectuate the change, essentially tonight. So as of tonight, we’ll have that new corporate structure and the savings will become immediate number one. Our expected savings per year is about $60 million of cash every year. Like those historic levels of cash was exiting the company as cash from financing that was in that specific cash flow line. So those savings will be materialized and will be accretive to the company essentially — immediately as those kind of tax distribution payments is as of tonight.
Great outcome. Some companies, I don’t know how much you know about that. Some companies, given one of those structures by paying hundreds of millions of dollars out, we did not — it costs us zero to unwind the structure. We feel great about the outcome.
Unidentified Analyst: That’s really helpful. Thank you. And then, I just wanted to dive into the strong AvKARE growth and the segment’s operating margin improvement. So can you talk about what drove the significant margin uplift in the quarter? And then also, I know GLP-1s have been a big area of focus. Is this also contributing to the strength in this segment?
Tasos Konidaris: Let me take this. So, AvKARE, as you may know, we acquired 65% of AvKARE in January 30 of 2020. And since then, even in periods of COVID and et cetera, that business has been proven incredibly resilient and growing. That’s point number one. Point number two is part of our strategic rationale is — was how do we leverage MBL’s pipeline of products to accelerate the historic growth of AvKARE and that has played exactly as we thought. There’s been a tremendous amount of product flow from AvKARE to — from — excuse me from ML to AvKARE that has created a tremendous amount of value to the patients. and the buyers right and the ultimate customers of AvKARE. So that growth has been driven by a couple of different reasons.
Number one is overall demand in the marketplace as population ages right and we have a natural, what I will call, a tailwind, number one. Number two there is simply kind of coming out of COVID, there is simply more product availability both from Amneal as well as the third-party providers that AvKARE works with. So, new product introductions fuel that. Number three, we’ve talked about certainties in the marketplace associated not only with the injectables, but in general, complex products. So, AvKARE was able to kind of tactically take advantage of certainties in the marketplace this year and price accordingly. So, that’s what why you see some of the increased gross margin in our performance this quarter and actually year-to-date versus prior years.
So, overall, those were the reasons why the growth of AVKARE has been strong and we continue to expect — I’m not sure that the business will continue to be growing 25%, 30% topline every year but definitely we expect strong double-digit growth for the next few years to follow. Does that help Sara?
Anthony DiMeo: Yes. So, Sara, I just want to clarify that AvKARE is a niche government distribution business for VA/DoD where you have to invest in product development, product partnership way in advance. So, it’s a value-added distribution, not just simple distribution. We do not distribute GLP-1s or anything. So, the growth is from value-added generics products from Amneal as well as other suppliers that AvKARE is set to do government contracting for long-term national contracts as well as FSS schedules and their unit dose business with the hospitals is growing as well.
Unidentified Analyst: That’s really helpful. Thank you.
Operator: Thank you. We will now take our next question from Balaji Prasad from Barclays. Balaji, your line is now open, please go ahead.
Balaji Prasad: Thank you. Hi, good morning everyone and apologies for missing the previous opportunities. Thanks again for that. A couple of questions from me. Firstly, it’s great to see the developments of the company over the past couple of years and especially the last two quarters the transformation has been pretty solid. As I look out over the next one or two years, I would allow to understand the pushes and pulls that we can expect for the cash flow outflow for 2024, 2025, see how we can think about the cash flow trends for the next couple of — Two, you’ve definitely flipped around the traditional generic model in looking on going after the markets in India and China. I’d love to get a sense of how large these markets can be, considering that both of these markets are different than the spectrum. India seems to be on a very strong growth platform, whereas China seems to have stalled. And how would you approach these markets differently? Thank you. Thank you.
Tasos Konidaris: Hey Balaji. Good morning. I’ll take the first one. So we think the next few years we continue to drive incremental revenue, incremental EBITDA and incremental cash. No question about it and the incremental cash. So if you look at our cash to EBITDA this year, there was over 50% much more favorable than prior years, because we intentionally focused on certain working capital improvements, okay. Our expectation is that will continue to grow. So as EBITDA grows, operating cash will continue to grow. That’s point number one. Point number two in terms of — you also know that CapEx were pretty much at scale. So we typically spend between $50 million $60 million maybe it goes a little higher maybe it was a little lower.
