Pernix Therapeutics began a series of refinancing transactions intended to improve liquidity, extend debt maturities and enable the company to create value for stakeholders. The transactions include a new $40 million asset-based revolving credit facility to refinance the Wells Fargo credit facility that was scheduled to mature on July 31, 2017 and a $45 million delayed draw term loan, including immediate access to $30 million and an additional $15 million available for certain acquisition purposes.
Cantor Fitzgerald Securities served as administrative agent for the facility.
Immediately following the completion of these transactions, Pernix will have approximately $63 million of total liquidity, including $42 million of cash and cash equivalents and $21 million available to draw under the new asset-based revolving credit facility, which the company believes will be sufficient to fund operations through at least the end of 2019.
In addition, separately, in order to help further improve its liquidity position, Pernix and GSK agreed to an amended settlement agreement under which Pernix will pay approximately $6.65 million to GSK, which is a reduction of up to approximately $14.5 million from the initial settlement agreement.
“Pernix has achieved significant progress in improving our business over the last 12 months,” said John Sedor, chairman and CEO of Pernix Therapeutics. “These transformative agreements remove the financing overhang from our company, provide us with capital through at least the end of 2019 and allow us to focus on further growing the business. In addition, we now have access to capital to opportunistically pursue additional product acquisitions in order to enhance Pernix’s position as a leading pain and neurology focused specialty pharmaceutical company.”
Specific details of the transactions include:
- Borrowings under the new $40 million asset-based credit facility accrue interest at a rate of LIBOR plus 7.50% per annum. The new credit facility will mature on July 21, 2022.
- The term loan credit agreement includes an incremental feature that allows the borrower, with the consent of a majority of the lenders under the credit agreement, to obtain up to an additional $20 million in term loan commitments from new or existing lenders that agree to provide such commitments. Interest on the loans may be paid either in cash or a combination of cash and in-kind interest, at the borrower’s election. Loans outstanding under the facility will be secured by substantially all of the assets of the borrower and its future-acquired subsidiaries. The facility will mature on July 21, 2022.
Davis Polk & Wardwell provided legal counsel, Perella Weinberg Partners served as financial advisor and Ernst & Young provided additional financial services and tax advice to Pernix.
Pernix Therapeutics is a specialty pharmaceutical business with a focus on acquiring, developing and commercializing prescription drugs primarily for the U.S. market.