UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: November 3, 2008
(Date of earliest event reported)
Akorn, Inc.
(Exact name of registrant as specified in its charter)
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| Louisiana
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001-32360
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72-0717400 |
(State or other
jurisdiction of
incorporation)
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(Commission
File Number)
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(I.R.S. Employer
Identification No.) |
1925 West Field Court, Suite 300
Lake Forest, IL 60045
(Address of principal executive offices, zip code)
(800) 932-5676
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions (see General
Instruction A.2. below):
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Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b)) |
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Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.
13e-4(c)) |
TABLE OF CONTENTS
Item 1.01 Entry into a Material Definitive Agreement.
On November 3, 2008, Akorn Inc. (“Akorn”) entered into a Commitment Letter (the “Commitment
Letter”) with General Electric Capital Corporation, an affiliate of GE Healthcare Financial
Services, Inc. (“GE”), pursuant to which, among other things and subject to terms and conditions
set forth in the Commitment Letter, GE committed to provide a $25,000,000 senior secured revolving
credit facility (the “Credit Facility”) to Akorn in return for Akorn agreeing to pay all reasonable
costs incurred in connection with the diligence and negotiation of the Commitment Letter and
preparation of the documentation for the Credit Facility, whether or not the Credit Facility is
consummated.
The Commitment Letter provides that the terms of the Credit Facility will include a limit on
the revolving credit available of the lesser of $25,000,000 and the sum of (a) 85% of the net
amount of Akorn’s eligible accounts receivable, plus (b) the lesser of (y) 50% of Akorn’s
eligible finished goods inventory valued at the lower of cost or market value and (z) 85% of the
net orderly liquidation value of Akorn’s eligible finished goods inventory, plus (c) 85%
of Akorn’s net orderly liquidation value of the eligible equipment, plus (d) 50% of
Akorn’s distressed value of the eligible real estate.
The term of the Credit Facility is expected to be 4 years and includes an incremental facility
of up to $10,000,000, provided that certain events have not occurred. Akorn will pay interest on
the outstanding principal balance under the Credit Facility at a rate equal to its choice of a
floating base rate plus a margin to be determined or LIBOR plus a margin to be determined. The
Credit Facility will be secured by a first priority perfected security interest in substantially
all existing and after-acquired real and personal property of Akorn and its subsidiary and the
Credit Facility will be guaranteed by Akorn’s subsidiary. Akorn will also be expected to pay (i) a
closing fee equal to a yet to be specified percentage of the amount of the Credit Facility; (ii) an
annual administration fee; (iii) a break-up, if applicable, in the amount of $125,000; and (iv) all
reasonable costs incurred in connection with the diligence and negotiation of the Commitment Letter
and preparation of the documentation for the Credit Facility.
The Commitment Letter also provides that the terms of the Credit Facility will include (i)
mandatory prepayments upon the happening of certain events, including, certain sales of assets or
securities as well as the receipt of certain insurance proceeds, (ii) payment of an unused
commitment fee, in a percentage to be determined, on the average unused daily balance of the Credit
Facility, and (iii) certain financial covenants, expected to include, but not be limited to,
minimum liquidity, tangible net worth, fixed charge coverage ratio and EBITDA.
The commitment of GE for the Credit Facility is subject to, among other things, the
negotiation and execution of definitive agreements and other customary terms and conditions. There
can be no assurance that Akorn will enter into the Credit Facility or that the Credit Facility will
occur on the terms and conditions described herein.
The description of the Commitment Letter herein is only a summary and is qualified in its
entirety by the full text of such document, which is filed as an exhibit hereto and is incorporated
by reference herein.