K-V Pharmaceutical Company (NYSE: KVa/KVb) announced today that it has entered into an agreement with US Healthcare I, L.L.C. and US Healthcare II, L.L. C. (together, the "Lenders") affiliates of New York-based Centerbridge Partners, L.P ("Centerbridge") for a senior secured debt financing package of up to $120 million consisting of (1) a fully funded $60 million term loan (the "Bridge Loan") that will retire the previously announced $20 million loan provided by the Lenders and provide for general corporate and working capital purposes and (2) a commitment to provide a multi-draw term loan up to an aggregate principal amount of $120 million consisting of three tranches that will be available to the Company for purposes that include the retiring of the Bridge Loan, following its satisfaction of certain conditions, including the pending approval of Gestiva™ which has an U.S. Food and Drug Administration action date of January 13, 2011.
Under the terms of the Bridge Loan agreement, the Company will pay interest at an annual rate of 16.5% (5% of which shall be payable in kind) with a maturity date of March 2013. The Company has furnished as collateral substantially all assets of the Company to secure the loan. The Bridge Loan is guaranteed by certain of the Company's domestic subsidiaries and the guarantors furnished as collateral substantially all of their assets to secure the guarantee obligations.
In addition, the Company issued a stock warrant to the Lenders that grants them rights to purchase up to 9,900,000 shares of the Company's Class A Common Stock, par value $.01 per share (the "Initial Warrant"). Upon the completion of a 10-day notice period to stockholders, the Company will issue a second stock warrant that grants the right to purchase up to 2,687,511 shares of the Company's Class A Common Stock, par value $.01 per share (the "Second Warrant," and together with the Initial Warrant, the "Warrants"). All warrants issued will have an exercise price of $1.62 per share. Jefferies & Co advised the Company on the above transaction.
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