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Guilford Pharmaceuticals gets up to $18 million line of credit in merger with MGI Pharma
By Jennifer Chiou
New York, July 22 - Guilford Pharmaceuticals Inc. has entered into a line of credit agreement for up to $18 million from MGI Pharma, Inc. to begin Oct. 1 and ending on the earlier of Dec. 31 or the termination of their merger, according to an 8-K filing with the Securities and Exchange Commission.
The loan will bear interest at 14% per year, payable monthly starting Jan. 1, 2006.
Guilford will merge with MGI Pharma and its subsidiary Granite Acquisition, Inc., with Guilford continuing as a wholly owned subsidiary of MGI Pharma.
As long as a loan is outstanding, the agreement contains covenants from Guilford that it will not merge or transfer all or most of its assets to any person and it must maintain available cash, marketable securities and investments in excess of $30 million.
Also, for 90 days after the termination of the merger agreement, Guilford has the right to sell the Gliadel assets to MGI Pharma for $90 million. Gliadel is a wafer that contains the chemotherapeutic drug carmustine.
In return, Guilford has agreed to grant to MGI Pharma a first priority security interest in the NAALDase inhibitor compounds, a treatment for neuropathic pain, and PARP inhibitor compounds for cancer and Aquavan intellectual property and related assets.
As previously announced in the merger, MGI Pharma will acquire all outstanding shares of Guilford stock for $3.75 per share in a taxable merger.
Based in Baltimore, Guilford develops pharmaceutical products for the hospital and neurology markets. MGI Pharma, which is a biotechnology company focused on cancer, has headquarters in Bloomington, Minn.
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