New 8-K:
>>ITEM 1.01 Entry into a Material Definitive Agreement
On December 14, 2005, OSI Pharmaceuticals, Inc. (the “Company”), obtained a commitment from JPMorgan Chase Bank, N.A. to provide a $75 million senior revolving credit line (the “Bank Facility”). The Bank Facility, if entered into, will be guaranteed by each of the Company’s domestic subsidiaries and will be secured by substantially all of the Company’s assets, including the assets of its domestic subsidiaries. The amount that we will be able to draw under the Bank Facility at any given time will not be permitted to exceed a specified percentage of our eligible receivables, minus a specified reserve, as each of those terms is defined under the Bank Facility, and is expected to be less than $75 million. The Bank Facility will have a three-year term and is repayable by the Company at any time without premium or penalty. Borrowings under the Bank Facility will bear interest at a fluctuating rate of interest with a margin that adjusts based on certain liquidity tests. At closing, the margin would be LIBOR plus 2.25% or prime plus 0.75%. The Company will also pay a commitment fee on the unused and available amounts of the Bank Facility. The Bank Facility is subject to numerous conditions, including the execution and delivery of definitive documentation.
The Company expects that the agreements governing the Bank Facility will contain certain customary restrictive financial and operating covenants which will affect, and in many respects significantly limit or prohibit, among other things, ability to incur indebtedness, make prepayments of certain indebtedness, pay dividends, make investments, engage in transactions with affiliates, create liens, sell assets and engage in mergers and consolidations. The Company’s failure to comply with such covenants could result in an event of default under the applicable instrument, which could permit acceleration of the debt under such instrument and in some cases acceleration of debt under other instruments that contain cross-default or cross-acceleration provisions. OSI’s press release dated December 14, 2005 is attached hereto as Exhibit 99.1 to this Current Report on Form 8-K (“Form 8-K”) and is incorporated herein by reference.<<
Cheers, Tuck |
