Vertex Pharmaceuticals gets $300 million term loan at 7.2% initial rate

By Susanna Moon

Chicago, July 9 – Vertex Pharmaceuticals Inc. obtained a $300 million senior secured term loan with initial interest rate of 7.2%, according to an 8-K filing with the Securities and Exchange Commission.

Interest on the loan will be reduced to 6.2% per year on the later of FDA approval and the one year anniversary of closing, in each case, until the second anniversary of the closing. Beginning on the second anniversary of closing, interest will be Libor plus 500 basis points to 750 bps, depending on the receipt of FDA approval.

The company closed a three-year credit agreement on Wednesday with Macquarie US Trading LLC as administrative agent.

Vertex also may request that the lenders establish an incremental senior secured term loan facility in an aggregate amount of up to $200 million.

The credit agreement is intended to strengthen the company’s financial position as it invests in key development programs in cystic fibrosis and in research for future medicines, including potential collaborations to support priority programs.

The agreement provides for an initial 12-month period where the company will pay only interest, followed by a two-year amortization period during which the company will pay interest and repay the principal of the loan. The majority of the principal will be repaid in the third year of the three-year term.

The loans will mature on July 9, 2017.

The company is required to repay principal on the loan in installments of $15 million per quarter from Oct. 1, 2015 through July 1, 2016 and in installments of $60 million per quarter from Oct. 1, 2016 through maturity.

The company may prepay the loans, in whole or in part, at any time, but the prepayments before the second anniversary of closing require a make-whole premium.

The obligations under the facilities are unconditionally guaranteed by some of the company’s domestic subsidiaries.

The pharmaceutical company is based in Cambridge, Mass.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.