By Susanna Moon
Chicago, Dec. 3 – Lannett Co. Inc. issued $250 million principal amount of its 12% senior notes due Dec. 15, 2023, according to an 8-K filing with the Securities and Exchange Commission.
Of that amount, $200 million of the notes were issued to UCB Manufacturing, Inc. as part of the payment for the acquisition of Kremers Urban Pharmaceuticals, Inc., with registration rights.
The notes were issued on Nov. 25 and are unsecured senior debt of Lannett and are subordinated to Lannett’s and the subsidiary guarantors’ secured debt, including the company’s secured credit facility.
Lannett may redeem the notes at any time before Sept. 30, 2016 at par plus accrued interest to but excluding the redemption date. From Oct. 1, 2016 to Dec. 15, 2018, Lannett may redeem the notes at par plus a make-whole premium and accrued interest to but excluding the redemption date.
The notes are redeemable from Dec. 15, 2018 to Dec. 15, 2019 at a price of 109% of par, from Dec. 15, 2019 to Dec. 15, 2020 at 106, from Dec. 15, 2020 to Dec. 15, 2021 at 103 and beginning Dec. 15, 2021 at par plus accrued interest.
In addition, at any time before Dec. 15, 2018, Lannett may redeem up to 35% of the principal amount of notes with the proceeds of equity offerings at a redemption price of 112 plus accrued interest, as long as at least 50% of the principal amount of the notes remains outstanding immediately after the redemption and that the redemption occurs within 120 days following the closing of the equity offering.
The notes indenture contains covenants that limit the ability of Lannett and Lannett’s restricted subsidiaries to incur additional debt, to guarantee debt or to issue some preferred shares, to pay dividends on, to redeem or to repurchase stock or make other distributions on its capital stock, to repurchase, to prepay or to redeem subordinated debt, to make loans and investments, to create restrictions on the ability of Lannett’s restricted subsidiaries to pay dividends to Lannett or the subsidiary guarantors or make other intercompany transfers, to create liens, to transfer or sell assets, to consolidate, to merge or to sell or otherwise dispose of all or substantially all of its assets, to enter into transactions with affiliates and to designate subsidiaries as unrestricted subsidiaries.
Upon a change of control, Lannett is required to make an offer to repurchase all of the notes at a purchase price equal to 101 plus accrued interest. If Lannett sells assets under some circumstances, it must use the proceeds to make an offer to purchase the notes at par plus accrued interest.
Lannett is a Philadelphia-based manufacturer of generic pharmaceutical products.
| Issuer: | Lannett Co. Inc.
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| Issue: | Senior notes
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| Amount: | $250 million
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| Maturity: | Dec. 15, 2023
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| Coupon: | 12%
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| Call options: | At par before Sept. 30, 2016; at par plus make-whole premium from Oct. 1, 2016 to Dec. 15, 2018; at 109 from Dec. 15, 2018 to Dec. 15, 2019; at 106 from Dec. 15, 2019 to Dec. 15, 2020; at 103 from Dec. 15, 2020 to Dec. 15, 2021; and at par beginning Dec. 15, 2021
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| Put option: | At 101 plus accrued interest upon a change of control
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| Settlement date: | Nov. 25
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