Lannett exchanging some term loan B for $190 million second-lien loan

By Sara Rosenberg

New York, April 6 – Lannett Co. Inc. entered into an agreement with some of its term loan B holders under which a portion of the existing term loan B will be exchanged for a new $190 million second-lien secured loan, according to an 8-K filed with the Securities and Exchange Commission on Tuesday.

Alter Domus (US) LLC will act as the administrative agent on the second-lien loan, and Deerfield Partners is the lender.

Pricing on the second-lien loan is 10% PIK in the first year and 5% cash and 5% PIK thereafter.

There is 103 call protection on the second-lien loan.

The second-lien loan matures in five years plus 90 days.

The company will issue the lenders participating in the exchange warrants to purchase up to 8.28 million shares of common stock at an exercise price of $6.88 per share.

The exchange is conditioned on the sale of $350 million of senior secured notes due 2026 and the amendment of the existing ABL revolving credit facility to increase the size to $45 million and extend the maturity to five years.

Wells Fargo Bank is the administrative agent on the ABL revolver.

Proceeds from the second-lien loan, notes and cash on hand will be used to repay the company’s existing term loan debt and pay related fees and expenses.

Lannett is a Philadelphia-based developer and manufacturer of generic pharmaceutical products for a wide range of medical indications.

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