17. SUBSEQUENT EVENTS
|12 Months Ended|
Dec. 31, 2018
|Subsequent Events [Abstract]|
|17. SUBSEQUENT EVENTS||
Transfer of Plasma Collection Facilities
Effective as of January 1, 2019, pursuant to the terms of the Biotest Transaction and as part of the purchase price for the Biotest Assets, the Company transferred to BPC two of its FDA-licensed source plasma collection facilities located in Norcross, GA and Marietta, GA. As a result of this transfer, the liability reflected in the accompanying consolidated balance sheets as of December 31, 2018 and 2017 in the amount of $12.6 million has been satisfied, and the Company will record a non-cash gain for this amount in the first quarter of 2019, net of the book value of the assets being transferred, which consist primarily of inventory and property and equipment, of approximately $1.1 million. In connection with this transfer, the Company and BPC entered into a transition services agreement (the “TSA”), pursuant to which the Company agreed to provide transition services to BPC, including services related to plasma operations, finance, human resources, contracts, regulatory affairs, information technology, quality systems and record retention (the “Services”), for a period of up to six months after the effective date of the TSA, subject to earlier termination or extension pursuant to the terms therein. In exchange for the Services, BPC will pay the Company based on an hourly billable rate which varies in amount depending on the ADMA staff member providing the Services. The TSA contains mutual confidentiality and indemnification provisions customary for an agreement of this nature.
Refinancing of Senior Credit Facility
On February 11, 2019, (the “Perceptive Closing Date”), the Company and all of its subsidiaries entered into a Credit Agreement and Guaranty (the “Perceptive Credit Agreement”) with Perceptive Credit Holdings II, LP, as the lender and administrative agent (“Perceptive”). The Perceptive Credit Agreement provides for a senior secured term loan facility in a principal amount of up to $72.5 million (the “Perceptive Credit Facility”), comprised of (i) a term loan made on the Perceptive Closing Date in the principal amount of $45.0 million, as evidenced by the Company’s issuance of a promissory note (the “Perceptive Initial Note”) in favor of Perceptive on the Perceptive Closing Date (the “Perceptive Initial Term Loan”), and (ii) an additional term loan in the principal amount of up to $27.5 million, but no less than $10.0 million (the “Perceptive Additional Term Loan” and, together with the Perceptive Initial Term Loan, the “Perceptive Loans”), which Perceptive Additional Term Loan is subject to the satisfaction of certain conditions, including, but not limited to, the FDA’s approval of the PAS or the FDA’s approval of the RI-002 BLA, and no Material Adverse Changes (as defined in the Perceptive Credit Agreement) having occurred since December 31, 2017; provided, that the Perceptive Additional Term Loan shall not be made later than June 30, 2020. The Perceptive Credit Facility has a maturity date of March 1, 2022 (the “Perceptive Maturity Date”), subject to acceleration pursuant to the Perceptive Credit Agreement, including upon an Event of Default (as defined in the Perceptive Credit Agreement).
On the Perceptive Closing Date, the Company used $30.0 million of the Perceptive Initial Term Loan to terminate and pay in full all of the outstanding obligations under the Marathon Credit Facility (see Note 7). The Company also (i) used $2.8 million of the Perceptive Initial Term Loan to pay a deferred facility fee to Marathon, (ii) used $6.5 million of the Perceptive Initial Term Loan to pay a prepayment penalty to Marathon, (iii) used $0.7 million of the Perceptive Initial Term Loan to pay outstanding accrued interest to Marathon, and (iv) used proceeds of the Perceptive Initial Term Loan to pay certain fees and expenses incurred in connection with the Perceptive Credit Facility of approximately $1.3 million. In addition, Marathon released the $4.0 million of cash held in the debt service reserve account (see note 7) to the Company.
Borrowings under the Perceptive Credit Agreement will bear interest at a rate per annum equal to 7.5% (the “Applicable Margin”) plus the greater of (i) one-month LIBOR and (ii) 3.5%; provided, however, that upon, and during the continuance of, an Event of Default, the Applicable Margin shall automatically increase by an additional 400 basis points. On the last day of each month during the term of the Perceptive Credit Facility, the Company will pay accrued interest to Perceptive. The rate of interest in effect as of the Perceptive Closing Date was 11.0%.
On the Perceptive Maturity Date, the Company will pay Perceptive the entire outstanding principal amount underlying the Perceptive Loans and any accrued and unpaid interest thereon. Prior to the Perceptive Maturity Date, there will be no scheduled principal payments on the Perceptive Loans. The Company may prepay outstanding principal on the Perceptive Loans at any time and from time to time upon three business days’ prior written notice, subject to the payment to Perceptive of, (A) any accrued but unpaid interest on the prepaid principal amount plus (B) a redemption premium amount equal to (i) 5.0% of the prepaid principal amount, if prepaid on or prior to the first anniversary of the Perceptive Closing Date, (ii) 4.0% of the prepaid principal amount, if prepaid after the first anniversary of the Perceptive Closing Date and on or prior to the second anniversary of the Perceptive Closing Date, or (iii) 3.0% of the prepaid principal amount, if prepaid after the second anniversary of the Perceptive Closing Date and on or prior to the third anniversary of the Perceptive Closing Date.
All of the Company’s obligations under the Perceptive Credit Agreement are secured by a first-priority lien and security interest in substantially all of the Company’s tangible and intangible assets, including intellectual property and all of the equity interests in the Company’s subsidiaries.
As consideration for the Perceptive Credit Agreement, the Company issued to Perceptive, on the Perceptive Closing Date, a warrant to purchase 1,360,000 shares of the Company’s our common stock (the “Perceptive Warrant”). The Perceptive Warrant has an exercise price equal to $3.28 per share, which is equal to the trailing 10-day VWAP of the Company’s common stock on the business day immediately prior to the Perceptive Closing Date multiplied by 1.15 (the “Closing Date Exercise Price”); provided, however, that following the Perceptive Closing Date until March 31, 2019, if the Closing Date Exercise Price exceeds the Automatic Adjustment Exercise Price (as defined below), the exercise price will automatically be decreased to (A) the lesser of (i) the 10-day VWAP of the common stock immediately following the public announcement, in the event such announcement occurs on or prior to March 31, 2019, concerning the FDA classification of the Company’s January 4, 2019 response to the BIVIGAM CRL, or (ii) the public offering price per share of the Company’s common stock, in the event that the Company closes a public offering of its common stock on or prior to March 31, 2019, multiplied by (B) 1.15 (such exercise price, the “Automatic Adjustment Exercise Price”). The Perceptive Warrant was valued by the Company at $2.7 million as of the Perceptive Closing Date, and has an expiration date of February 11, 2029. Perceptive represented to the Company, among other things, that it was an “accredited investor” (as such term is defined in Rule 501(a) of Regulation D under the Securities Act and the Company issued the Perceptive Warrant in reliance upon an exemption from registration contained in Section 4(2) under the Securities Act. The Perceptive Warrant and the shares of common stock issuable thereunder may not be offered, sold, pledged or otherwise transferred in the U.S. absent registration or an applicable exemption from the registration requirements under the Securities Act.
The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef