Lannett Company, Inc. (NYSE: LCI) today announced that it has entered into an amendment of its credit agreement effecting the term A loans thereunder (Term A Loans) to provide the company greater flexibility with regard to its financial leverage ratio covenant applicable to such Term A Loans. With the amended leverage ratios, the company expects to be well within its financial covenants through the maturity date of the Term A Loans.
The amendment increases the required Secured Net Leverage Ratio applicable to the financial leverage ratio covenant from 3.25 times to 4.25 times as of December 31, 2019, with a step-down to 4.00 times as of September 30, 2020. Currently, the required Secured Net Leverage Ratio stands at 3.75 times.
In exchange, the company agreed to i) include a Minimum Liquidity Covenant of $75 million; ii) a 25 basis point increase to the interest rate margin paid on the Term A Loans; and iii) a consent fee equal to 50 basis points, paid only to consenting lenders. A full description of the details of the amendment will be filed on a Form 8-K.
“We are pleased to have the support of our lenders and appreciate their confidence in Lannett, due in part to the excellent progress we are making expanding our pipeline and launching new products, while also reducing our costs,” said Tim Crew, chief executive officer of Lannett. “This amendment provides further financial flexibility and better positions us to capitalize on additional growth opportunities. We continue to diversify our product base, build strategic relationships, advance our drug development program and evaluate a range of alternatives regarding our long-term capital structure.”
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