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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
DATE OF REPORT (DATE OF
EARLIEST EVENT REPORTED): NOVEMBER 14, 1997 (OCTOBER 31, 1997)
CHIREX INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0 - 27698 04-3296309
(State or other jurisdiction of Commission File number (I.R.S. Employer
incorporation or organization) Identification No.)
300 Atlantic Street
Suite 402
Stamford, Connecticut 06901
(Address of principle executive office) (Zip Code)
(203) 351-2300
(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On October 31, 1997, ChiRex Inc. (the "Company" or "ChiRex") and Glaxo Wellcome
plc ("Glaxo Wellcome or Glaxo") announced that ChiRex completed its purchase of
Glaxo Wellcome's FDA cGMP pharmaceutical production facility at Annan, Scotland
("Annan"). Glaxo Wellcome has received approximately $66 million ((pounds)40
million) for the facility plus an additional payment for certain working capital
of approximately $1.6 million (approximately (pounds)1 million) and ChiRex will
initiate the manufacture of certain pharmaceutical intermediates and active
ingredients under a five-year contract with Glaxo valued at approximately $450
million. The transaction will be accounted for as a purchase.
On July 7, 1997, ChiRex announced the signing of a letter of intent with Glaxo
Wellcome plc to acquire Glaxo Wellcome's FDA cGMP pharmaceutical production
facility at Annan, Scotland. As part of the proposed agreement, Glaxo Wellcome
would award the Company a five-year contract to supply certain pharmaceutical
intermediates and active ingredients worth approximately $450 million. A
definitive Asset Purchase Agreement and Supply Agreement were signed by the
Company and Glaxo Welcome on September 23, 1997, on essentially the same terms
contained in the letter of intent with the closing occurring no later than
November 15, 1997.
Under the Asset Purchase Agreement, ChiRex purchased all of the buildings, land
and equipment at the 154-acre Annan, Scotland property, encompassing three main
production facilities plus certain working capital. Under the Supply Agreement,
ChiRex will continue to manufacture most of the products currently made at Annan
and plans to invest (pounds)20 million (approximately $31 million) over five
years to accommodate newly contracted products and to modify the facility for
general purpose pharmaceutical fine chemical manufacturing.
To finance the acquisition and provide for the general cash requirements of the
business, a subsidiary of the Company entered into a senior secured term-loan
and revolving credit agreement on October 29, 1997, with Bankers Trust Company
allowing it to borrow up to (pounds)62 million (approximately $100 million) for
a five-year period. The credit facility is comprised of a (pounds)40 million
(approximately $65 million) term loan and a (pounds)22 million (approximately
$35 million) revolving credit facility each bearing interest at LIBOR plus 1%.
The term-loan facility is repayable in nine equal semi-annual installments
beginning in late 1998 and also provides for annual mandatory pre-payments from
excess cashflow as defined in the credit agreement. Borrowings under the credit
facility are secured by the real and personal property of and guaranteed by the
Company and its subsidiaries. The credit agreement contains normal and customary
financial covenants and limitations on indebtedness, dividends, capital
expenditures and certain other transactions. The Company's existing bank
revolving credit facility was repaid and terminated upon signing of the new
credit facility.
ChiRex is a Contract Manufacturing Organization serving the outsourcing needs of
the pharmaceutical industry through its extensive pharmaceutical fine chemical
manufacturing, process development capabilities and proprietary chiral
technologies. The Company supports and supplements the in-house development and
manufacturing capabilities of its pharmaceutical and biotechnology customers
with a broad range of fully-integrated services, accelerating the time from drug
discovery to commercialization. ChiRex currently produces over 50 products in
its two world-class, FDA cGMP manufacturing facilities in Dudley,
Northumberland, England and in Annan, Scotland. ChiRex holds over 50 patents and
patent applications in the field of chiral chemistry.
Any statements contained in this Current Report on Form 8-K that relate to
future plans, events or performance, are forward-looking statements that involve
risks and uncertainties, including, but not limited to, product development and
market acceptance risks, product manufacturing risks, the impact of competitive
products and pricing, the results of current and future licensing and other
collaborative relationships, the results of financing efforts, developments
regarding intellectual property rights and litigation, risks of product
non-approval or delays or post-approval reviews by the FDA or foreign regulatory
authorities, and other risks identified in the ChiRex Inc.'s Securities and
Exchange Commission filings. Actual results, events or performance may differ
materially. Readers are cautioned not to place
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undo reliance on these forward-looking statements, which speak only as the date
hereof. ChiRex undertakes no obligation to publicly release the results of any
revisions to these forward-looking statements that may be made to reflect events
or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
ITEM 7 - FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of the Business Acquired.
Audited financial statements for the Annan Manufacturing Site of Glaxo
Operations UK Limited for the years ended December 31, 1994, 1995 and 1996
required by Item 7(a) of this Current Report on Form 8-K will be filed with the
Securities and Exchange Commission as soon as possible, but in any event on or
prior to January 13, 1998.
(b) Pro Forma Financial Statements.
Unaudited pro forma combined balance sheets and statements of operations of the
Company and the Annan Manufacturing Site of Glaxo Operations UK Limited required
by Item 7(b) of this Current Report on Form 8-K will be filed with the
Securities and Exchange Commission as soon as possible, but in any event on or
prior to January 13, 1998.
(c) Exhibits.
The exhibits listed in the accompanying Exhibit Index are filed pursuant to Item
7(c) of this Current Report on Form 8-K.
SIGNATURE
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 thereunto duly authorized.
CHIREX INC.
Date: November 14, 1997 By: /s/ Michael A. Griffith
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Michael A. Griffith
Chief Financial Officer
and Secretary
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EXHIBIT INDEX
Exhibit Number Description
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2.1* Asset Purchase Agreement between ChiRex
Inc. and Glaxo Wellcome plc
4.1 Facilities Agreement between ChiRex
(Holdings) Limited. and Bankers Trust
Company
4.2 Pledge Agreement between ChiRex Inc. and
Bankers Trust Company
10.1* Supply Agreement between ChiRex Inc. and
Glaxo Wellcome plc
99.1 ChiRex Inc. press release dated October
31, 1997
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* Certain portions of this exhibit have been omitted and are subject to a
confidential treatment request. The omitted portions have been filed separately
with the Securities and Exchange Commission.
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