Bradley Pharmaceuticals defaults on convertibles, loan; payment blockage period enforced

By Caroline Salls

Pittsburgh, June 7 - Bradley Pharmaceuticals Inc.'s lenders for its $125 million credit facility imposed a payment blockage period after the company defaulted on the loan, keeping the company from paying on its 4% convertible senior subordinated notes due 2013, according to a company news release.

Bradley is also in default on the convertibles because it did not file its 10-K annual report with the Securities and Exchange Commission within 30 days of receiving a default notice.

Under the notes' indenture, holders of the convertibles have accelerated payment on the $37 million principal amount of convertibles.

However, in light of the default on the credit facility, no payment can be made to the noteholders until the end of the payment blockage period. The credit facility is senior to the convertibles.

Under the loan indenture, the payment blockage period will end on the earliest of:

* 179 days after notice of the payment blockage, provided that the senior debt has not been accelerated;

* The date on which the non-payment default is cured, waived or ceases to exist;

* The date on which the senior debt is discharged or paid in full; or

* The date on which the payment blockage period is terminated by written notice to the trustee from the representative of the senior debt initiating the blockage.

According to the release, Bradley and Wachovia Bank NA, the administrative agent for the lenders, have agreed in principle to a new comprehensive financing solution for the company, which the company expects to be implemented during the first half of the third quarter.

This financing will allow Bradley to satisfy all obligations under the convertibles and provide it with term and revolving credit facilities.

Upon closing of this new facility, Bradley's existing credit facility and convertibles will be terminated.

Bradley is a Fairfield, N.J., specialty pharmaceutical company.

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