| Item 1.01 | Entry Into a Material Definitive Agreement. |
On February 28, 2019, Recro Pharma, Inc. (the “Company”) entered into a Second Amendment to Credit Agreement and Investment Documents (the “Second Amendment”) by and among the Company, certain of the Company’s subsidiaries named as guarantors therein (the “Guarantors”), Athyrium Opportunities III Acquisition LP, as a lender and as the administrative agent for the lenders thereunder (“Athyrium”), and the other lenders named therein (the “Lenders”).
Pursuant to the Second Amendment, (i) the total commitments of the term loan credit facility governed by the Company’s Credit Agreement dated November 17, 2017 by and among the Company, the Guarantors, the Lenders and Athyrium, as previously amended by that certain First Amendment to Credit Agreement and Investment Documents, dated as of December 28, 2018 (collectively, the “Existing Credit Agreement”), was increased from $100 million to $125 million, (ii) the $15 millionterm B-2 loan and $15 million term C loan provided for under the Existing Credit Agreement were restructured into a $55 millionterm B-2 loan which was funded on the date of execution of the Second Amendment and (iii) the maturity date was extended to March 31, 2023 (the “Maturity Date”).
Beginning on March 31, 2021, the Company must repay the outstanding principal amount of the $60 millionTerm-A loan (the “Term A Loan”), $10 million TermB-1 loan (the “TermB-1 Loan”) and the $55 million TermB-2 loan (the “TermB-2 Loan” and collectively with the Term A Loan and the TermB-1 Loan, the “Loans”)) in quarterly installments of $3,000,000 with the outstanding principal balance due on the Maturity Date. To the extent the Company prepays, or is required to prepay, the Loans, in addition to such amount being prepaid, (i) with respect to the Term A Loan, the Company must pay a premium equal to: (a) 7.5% of the principal amount of any prepayment paid or required to be paid on or prior to March 31, 2020 plus all interest that would have accrued on the Term A Loan to and including March 31, 2020, (b) 5.00% of the principal amount of any prepayment paid or required to be paid after March 31, 2020 but on or prior to March 31, 2021, (c) 2.5% of the principal amount of any prepayment paid or required to be paid after March 31, 2021 but on or prior to March 31, 2022, and (d) 0.00% with respect to any prepayment paid or required to be paid thereafter, and (ii) with respect to the TermB-1 Loan or the TermB-2 Loan, the Company must pay a premium equal to: (a) 7.5% of the principal amount of any prepayment paid or required to be paid on or prior to March 31, 2021 plus all interest that would have accrued on the TermB-1 Loan andB-2 Loan to and including March 31, 2021, (b) 5.0% of the principal amount of any prepayment paid or required to be paid after March 31, 2021 but on or prior to March 31, 2022, and (c) 2.5% of the principal amount of any prepayment paid or required to be paid thereafter.
In addition, pursuant to the Second Amendment, the minimum liquidity covenant was increased to $12 million and the Consolidated Debt to Revenues Ratio covenant under the Existing Credit Agreement was replaced with a Consolidated Leverage Ratio covenant based on EBITDA of the Company’s CDMO segment. Such leverage ratio covenant must be no greater than 4.5 to 1.00 as of the end of any fiscal quarter of the Company.
In connection with the execution of the Second Amendment, the Company paid Athyrium (i) a $2,500,000 amendment fee, (ii) a $436,000 closing fee, (iii) an original issue discount of $11,400,000 and (iv) certain other fees and expenses, including the fees and expenses of Athyrium’s legal counsel.
The foregoing description of the Second Amendment does not purport to be complete and is qualified in its entirety by the terms and conditions of the Second Amendment, which is attached hereto as Exhibit 10.1 and incorporated herein by reference.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under anOff-Balance Sheet Arrangement of Registrant. |
The information set forth under Item 1.01 above is incorporated into this Item 2.03 by reference.
