Lifecore Biomedical Enters into $150.0 Million in New Financing, Repays its Outstanding Term Loans and Signs New Supply Agreement to Expand HA Fermentation Capacity with Existing Long-Term Customer
23 May 2023 - 6:51AM
Lifecore Biomedical, Inc. (“Lifecore” or the “Company” Nasdaq:
LFCR), a fully integrated contract development and manufacturing
organization (“CDMO”), today announced that it has entered into a
broad set of agreements with its long-term customer, Alcon
(SIX/NYSE: ALC), which provides for the repayment of the Company’s
existing credit agreement with its current lenders and
substantially increases the amount of hyaluronic acid (“HA”) that
Lifecore is expected to supply for use in Alcon’s commercial
products.
“These agreements validate the value Lifecore
delivers, both to our customers and to the patients who benefit
from treatments that Lifecore helps produce. We appreciate the
trust that has been demonstrated through a deepened partnership
with this strategic, global customer,” stated James G. Hall,
President and Chief Executive Officer of Lifecore. “The closing of
the new credit arrangement and equipment sale and leaseback
provides for the repayment of our current term loan agreement with
more favorable terms and greater flexibility. In addition, the
10-year expansion of the HA fermentation supply agreement
represents a significant enhancement to one of our strongest
customer relationships and a meaningful solidification of our HA
pipeline. Combined, we believe these arrangements greatly improve
the opportunities for the Company in its continued evaluation of
potential strategic alternatives to maximize value for
stockholders.”
New Financing Arrangements
Under the terms of the lending and equipment
sale and leaseback arrangements, Alcon has provided total
commitments of $150.0 million, which includes a six-year senior
secured term facility and a sale leaseback of certain HA
fermentation equipment. The term facility bears interest at the
rate of 10%, which is payable in kind (“PIK”) for the first three
years, and payable 3% in cash interest and 7% PIK interest
thereafter until maturity. Alcon and the Company also entered into
an equipment sale and leaseback transaction related to certain HA
fermentation assets, with a lease term of ten years, subject to
certain repurchase rights.
Concurrently with this arrangement, the Company
and BMO, the Company’s current lender under its existing ABL
revolving credit facility, which will remain outstanding, entered
into an amendment to the ABL revolving credit facility, which,
among other things, contains waivers for all current defaults under
our ABL credit facility.
Amended and Restated Supply
Agreement
The Amended and Restated Supply Agreement with
Alcon extends the term through December 31, 2033, and increases the
amount of expected HA product to be delivered by Lifecore to Alcon
at Lifecore’s existing facilities. The equipment sale and leaseback
documents also contemplate that Lifecore intends to work closely
with Alcon to develop a plan to build out additional
capacity.
Additional information regarding the
arrangements described in this press release can be found in the
Company’s Current Report on Form 8-K that will be filed by the
Company with the Securities and Exchange Commission today.
Mr. Hall concluded, “These agreements
demonstrate our focus on finding an optimal path forward for the
business, while not losing sight of our continuous efforts to
advance our project portfolio. We believe these agreements also
improve the potential outcome from our strategic review process and
open the door to greater flexibility for the Company going
forward.”
About Lifecore Biomedical
Lifecore Biomedical, Inc. is a fully integrated
contract development and manufacturing organization (CDMO) that
offers highly differentiated capabilities in the development, fill
and finish of complex sterile injectable pharmaceutical products in
syringes and vials. As a leading manufacturer of premium,
injectable grade hyaluronic acid, Lifecore brings more than 40
years of expertise as a partner for global and emerging
biopharmaceutical and biotechnology companies across multiple
therapeutic categories. For more information about the Company,
visit Lifecore’s website at www.lifecore.com.
Important Cautions Regarding
Forward-Looking StatementsThis press release contains
forward-looking statements regarding future events and future
results that are subject to the safe harbor created under the
Private Securities Litigation Reform Act of 1995 and other safe
harbors under the Securities Act of 1933 and the Securities
Exchange Act of 1934. Words such as “anticipate”, “estimate”,
“expect”, “project”, “plan”, “intend”, “believe”, “may”, “might”,
“will”, “should”, “can have”, “likely” and similar expressions are
used to identify forward-looking statements. Forward-looking
statements in this press release include statements, among others,
related to the Company’s exploration of its strategic alternatives,
the future relationship between Alcon and the Company, if any, and
the potential terms and timing thereof. All forward-looking
statements involve certain risks and uncertainties that could cause
actual results to differ materially, including such factors among
others as the outcome of any evaluation of the Company’s strategic
alternatives or any discussions with any potential bidders related
thereto, the ability of the Company to continue as a going concern,
the ability of the Company to conduct its strategic review process
in a timely manner or at all, the timing and needs related to
capital expenditures, any future relationship between Alcon and the
Company, if any, the timing and expenses associated with
operations, the ability to achieve acceptance of the Company’s new
products in the market place, government regulations affecting our
business, the timing of regulatory approvals, uncertainties related
to COVID-19 and the impact of our responses to it, the mix between
domestic and international sales, and the ability to successfully
realize the anticipated benefits of the refocusing of the Company’s
business on Lifecore. For additional information about factors that
could cause actual results to differ materially from those
described in the forward-looking statements, please refer to the
Company’s filings with the Securities and Exchange Commission,
including the risk factors contained in its Quarterly Reports on
Form 10-Q and Annual Report on Form 10-K. Forward-looking
statements represent management’s current expectations and are
inherently uncertain. Except as required by law, the Company does
not undertake any obligation to update forward-looking statements
to reflect subsequent events or circumstances.
Contact Information:Investor
RelationsJeff Sonnek(646)
277-1263jeff.sonnek@icrinc.com
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