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
November 21, 1996
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Date of Report (date of earliest event reported)
CHESAPEAKE BIOLOGICAL LABORATORIES, INC.
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(Exact name of Registrant as specified in its charter)
Maryland 1-12748 52-1176514
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
Incorporation) Number)
11412 Cronridge Drive
Owings Mills, Maryland 21117
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(Address of principal executive offices)
410-998-9800
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(Registrant's telephone number, including area code)
ITEM 5: Other Events
Chesapeake Biological Laboratories, Inc. (the "Registrant") has completed
the acquisition of an approximately 70,000 square foot building, located on 3.48
acres of land, in Baltimore City, Maryland, which is to be renovated and
equipped for use by the Registrant as a pharmaceutical manufacturing facility.
The purchase price paid for the land and existing improvements was comprised of
$2,150,000 in cash, and 125,000 shares of the Registrant's Class A Common Stock,
$0.01 par value per share. Once renovated, the facility will also include
office and warehouse space, as required to support the Registrant's
pharmaceutical manufacturing operations.
The cash portion of the purchase price for the land and existing building,
as well as the cost of the proposed renovations and a portion of the
pharmaceutical manufacturing equipment and related pharmaceutical facility
build-out, is financed through a $7,000,000 Economic Development Bond, issued by
the Maryland Industrial Development Financing Authority ("MIDFA"), and a
$1,500,000 loan from the City of the Baltimore Development Corporation. A
closing occurred in connection with the Bond issuance and the $1,500,000 loan,
concurrent with the purchase of the land and existing building. The Registrant
also intends to equip the new facility with approximately $2,900,000 of
additional pharmaceutical manufacturing equipment to be financed through
equipment leasing arrangements with others.
The Bonds are variable rate, tax exempt, and are issued pursuant to a Trust
Indenture. The maximum annual interest rate on the Bonds is 12% and, subject to
certain conditions, the Bonds may be converted to fixed-rate at the option of
the Registrant. The principal portion of the Bonds, and the accrued interest
thereon, is payable from monies drawn under a direct pay Letter of Credit issued
by The First Union National Bank of North Carolina (the "Bank"), in an amount up
to $7,280,000. Interest is payable quarterly, commencing February 1, 1997, and
principal portions of the Bonds are subject to redemption, in part, commencing
November 1998, in accordance with a schedule set forth in the Bonds. The
Maturity Date is August 1, 2018. The Letter of Credit is issued pursuant to a
Letter of Credit and Reimbursement Agreement containing various terms and
covenants applicable to the Registrant, and the Registrant's obligations in
respect of the Letter of Credit and the Bonds are secured by substantially all
of the assets of the Registrant, including the new facility. MIDFA has also
provided the Bank with additional credit support for the Letter of Credit, in
the form of a $1,800,000 deficiency guaranty.
The Whiting-Turner Contracting Company, Baltimore, Maryland, is the
construction manager for the project; and Lockwood Greene, Inc., of Somerset,
New Jersey, has been retained as architectural and manufacturing process design
engineer. Completion of the renovation and pharmaceutical build-out of the
facility is now scheduled for on or about the close of the first calendar
quarter 1998. The new facility is located in a Federal Empowerment Zone.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CHESAPEAKE BIOLOGICAL LABORATORIES, INC.
Dated: November , 1996 By
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Name: John C. Weiss, III
Title: President
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