King Pharmaceuticals makes $37.75 million loan available to Ligand

By Jennifer Chiou

New York, Oct. 18 - King Pharmaceuticals, Inc. entered into a $37.75 million loan agreement, under which it agreed to make the funds available to Ligand Pharmaceuticals Inc., according to an 8-K filing with the Securities and Exchange Commission.

The Bristol, Tenn., pharmaceutical company said the loan bears interest at 9.5%.

The agreement is linked to King's pending acquisition of Ligand's assets related to Avinza, morphine sulfate extended-release capsules.

The loan may only be used to pay Ligand's obligations to Organon USA Inc.

If the transaction closes on or before Jan. 8, King said it will forgive any accrued interest on the loan and the principal amount due will be credited against the purchase price for the Avinza assets.

If it does not close by Jan. 8, the outstanding principal amount of the loan, accrued interest and additional default interest of 2% from Jan. 1 to Jan. 8 will become payable on Jan. 9.

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