aaiPharma's new loan comes as an alternative to a previously announced $40 million priority revolver with B of A. Arthur Wong, a Standard & Poor's analyst, said the credit is meant to alleviate the company's immediate liquidity pressures. aaiPharma lost access to the $100 million revolver under its previous facility led by B of A, Wachovia Securities and CIBC World Markets, after disclosing the need to materially adjust financial information. Soon after, aaiPharma obtained a commitment from B of A for the $40 million revolver (LMW, 4/5). Calls to William Ginna, executive v.p. and cfo of aaiPharma, were referred to a spokeswoman, who did not provide comment by press time.
The new $135 million credit has a two-year maturity and is priced at LIBOR plus 61/2%, according to an aaiPharma filing. In the event of default, interest will accrue at a rate of 2% per year above the original rate. There is also a 3% prepayment fee for the first nine months and 11/2% for the next nine months. Silver Point officials referred calls to spokespeople, who declined comment.
In order to access the new credit facility, aaiPharma will have to complete the M.V.I. and Aquasol sale. The company also needed to get the approval of its senior subordinated bondholders, who had until last Friday after LMW went to press, to give their consent. Loan market traders said there was little risk that the bondholders would not consent to the new facility. "No one wants [the company] to fail," noted one. But the company has $9.6 million of past interest due to bondholders. Wong said the new facility and proceeds from the product sales will also be used to pay a $31 million product right payment, a possible $14 million Darvocet product line extension acquisition, and the interest payment to bondholders.