Business
Lifecore Biomedical Enters into $150.0 Million in New Financing, Repays its Outstanding Term Loans and Signs New Supply Agreement to Expand HA Fermentation Capacity with Existing Long-Term Customer
New $150 million credit arrangements include six-year credit agreement and equipment sale and leaseback to replace existing term loan CHASKA, Minn., May 22,
About this update from Lifecore Biomedical, Inc.
[{"type":"text","content":"New $150 million credit arrangements include six-year credit agreement and equipment sale and leaseback to replace existing term loan\nCHASKA, Minn., May 22, 2023 (GLOBE NEWSWIRE) -- Lifecore Biomedical, Inc. (“Lifecore” or the “Company” Nasdaq: LFCR), a fully integrated contract development and manufacturing organization (“CDMO”), today announced that it has entered into a broad set of agreements with its long-term customer, Alcon (SIX/NYSE: ALC), which provides for the repayment of the Company’s existing credit agreement with its current lenders and substantially increases the amount of hyaluronic acid (“HA”) that Lifecore is expected to supply for use in Alcon’s commercial products. “These agreements validate the value Lifecore delivers, both to our customers and to the patients who benefit from treatments that Lifecore helps produce. We appreciate the trust that has been demonstrated through a deepened partnership with this strategic, global customer,” stated James G. Hall, President and Chief Executive Officer of Lifecore. “The closing of the new credit arrangement and equipment sale and leaseback provides for the repayment of our current term loan agreement with more favorable terms and greater flexibility. In addition, the 10-year expansion of the HA fermentation supply agreement represents a significant enhancement to one of our strongest customer relationships and a meaningful solidification of our HA pipeline. Combined, we believe these arrangements greatly improve the opportunities for the Company in its continued evaluation of potential strategic alternatives to maximize value for stockholders.” New Financing Arrangements Under the terms of the lending and equipment sale and leaseback arrangements, Alcon has provided total commitments of $150.0 million, which includes a six-year senior secured term facility and a sale leaseback of certain HA fermentation equipment. The term facility bears interest at the rate of 10%, which is payable in kind (“PIK”) for the first three years, and payable 3% in cash interest and 7% PIK interest thereafter until maturity. Alcon and the Company also entered into an equipment sale and leaseback transaction related to certain HA fermentation assets, with a lease term of ten years, subject to certain repurchase rights. Concurrently with this arrangement, the Company and BMO, the Company’s ...