8-K
UNITED STATES
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): December 11, 2008 (December 5, 2008)
King Pharmaceuticals, Inc.
(Exact name of registrant as specified in its charter)
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Tennessee
(State or Other Jurisdiction
of Incorporation)
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001-15875
(Commission
File Number)
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54-1684963
(I.R.S. Employer
Identification No.) |
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501 Fifth Street
Bristol, Tennessee
(Address of principal
executive offices)
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37620
(Zip Code) |
Registrants telephone number, including area code: (423) 989-8000
Former name or former address if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
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Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c)) |
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement of a Registrant.
King Pharmaceuticals, Inc. (King) entered into Amendment No. 1 to Credit Agreement, dated as
of December 5, 2008 (Amendment No. 1), by and among King, Credit Suisse, Cayman Islands Branch,
Wachovia Bank, National Association, Bank Hapoalim B.M., Bank of America, N.A., Chang Hwa
Commercial Bank, Ltd., New York Branch, Citibank, N.A., Dnb NOR Bank ASA, First Commercial Bank,
Los Angeles Branch, First Tennessee Bank, National Association, Fortis Bank, JPMorgan Chase Bank,
N.A., the Royal Bank of Scotland plc, and U.S. Bank, N.A. Upon the satisfaction of certain
conditions contained in Amendment No. 1, including Kings entering into a $300.0 million term loan
credit agreement, the consummation of Kings previously announced tender offer (the Offer) for
all of the outstanding shares (Shares) of Class A Common Stock of Alpharma Inc. (Alpharma) and
certain other customary closing conditions, Amendment No. 1 would become effective and amend Kings
$475.0 million Credit Agreement, dated as of April 19, 2007 (the Original Credit Agreement and,
the $475.0 million senior secured revolving credit facility provided thereunder, the Credit
Facility).
Upon the effectiveness of Amendment No. 1, King would be entitled to utilize the funds under
the Credit Facility, as amended by Amendment No. 1, for working capital and general corporate
purposes and would also be entitled to utilize the funds to fund the purchase of Shares in the
Offer and to consummate the other transactions contemplated by the Merger Agreement by and among
King, Alpharma and Albert Acquisition Corp., a wholly owned subsidiary of King, dated as of
November 23, 2008 (the Merger Agreement).
Unless and until Amendment No. 1 becomes effective, King will continue to be entitled to
utilize the funds under the Credit Facility on its existing terms for working capital and general
corporate purposes.
As of the date of this report, among other things, King has not entered into a $300.0 million
term loan credit agreement and accordingly is not presently entitled to utilize the funds under the
Credit Facility, as amended by Amendment No. 1, to fund the purchase of shares in the Offer or to
consummate the other transactions contemplated by the Merger Agreement. There is no assurance that
King will enter into a $300.0 million term loan credit agreement or will satisfy the other
conditions contained in Amendment No. 1.
Other material terms of the Credit Facility, as amended by Amendment No. 1, which would apply
upon satisfaction of the conditions contained in Amendment No. 1, are described below.
The amended Credit Facility would remain in the aggregate principal amount of $475.0 million.
The amended Credit Facility would provide for a $20.0 million sublimit for swingline loans and a
$40.0 million sublimit for the issuance of standby letters of
credit, and would mature on April 19,
2012 or, in the event certain conditions are not met, October 1, 2011. Any swingline loans and
letters of credit would reduce the available commitment under the Credit Facility on a
dollar-for-dollar basis.
In addition to the existing subsidiary guarantees, the loans and other obligations under the
amended Credit Facility would be guaranteed by substantially all of the domestic subsidiaries of
King.
In addition to the existing collateral, Kings obligations under the amended Credit Facility
would be secured by substantially all of the assets of King and each guarantor (subject to certain
exceptions and limitations).
Kings borrowings under the Credit Facility, other than swingline loans, would bear interest
at annual rates that, at Kings option, would be either:
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a base rate generally defined as the sum (i) the greater of (a) the prime rate of
Credit Suisse and (b) the federal funds effective rate plus 0.5% and (ii) an applicable
percentage of 4.0%; |
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an adjusted LIBO rate generally defined as the sum of (i) the product of (a) LIBOR
(by reference to the British Banking Association Interest Settlement Rates) and (b) a
fraction the numerator of which is one and the denominator of which is the number one
minus certain maximum statutory reserves for eurocurrency liabilities and (ii) an
applicable percentage of 5.0%. |
All swingline loans would bear interest computed under the base rate formula.
Interest on Kings borrowings would be payable quarterly in arrears for base rate loans and at
the end of each interest rate period (but not less often than quarterly) for LIBOR loans.
King would be required to pay an unused commitment fee on the difference between committed
amounts and amounts other than swingline loans actually used under the Credit Facility equal to
0.5% per annum. King would also be required to pay a letter of credit participation fee based upon
the aggregate face amount of outstanding letters of credit equal to 5.0% per annum.
The amended Credit Facility would require King to meet certain financial tests, including,
without limitation:
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maintenance of maximum funded debt to consolidated EBITDA ratios that range from
1.50 to 1 to 3.25 to 1 (depending on dates and the occurrence of certain events
relating to certain patents); and |
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maintenance of minimum consolidated EBITDA to interest expense ratios that range
from 3.75 to 1 to 4.00 to 1 (depending on dates and the occurrence of certain events
relating to certain patents). |
In addition, the amended Credit Facility would contain certain covenants that, among other
things, restrict additional indebtedness, liens and encumbrances, sale and leaseback transactions,
loans and investments, acquisitions, dividends and other restricted payments, transactions with
affiliates, asset dispositions, mergers and consolidations, prepayments, redemptions and
repurchases of other indebtedness and other matters customarily restricted in such agreements.
The amended Credit Facility would contain customary events of default, including, without
limitation, payment defaults, breaches of representations and warranties, covenant defaults,
cross-defaults to certain other material indebtedness in excess of specified amounts, certain
events of bankruptcy and insolvency, certain ERISA events, judgments in excess of specified
amounts, certain impairments to the guarantees, and change in control.
Certain of the lenders under the Credit Facility or their affiliates have provided, and may in
the future provide, certain commercial banking, financial advisory, and investment banking services
in the ordinary course of business for King, its subsidiaries and certain of its affiliates, for
which they receive customary fees and commissions. Affiliates of Credit Suisse and Wachovia Bank,
National Association are parties to an existing debt commitment letter providing for financing for
the Offer subject to the terms
and conditions contained in such letter and are acting as financial advisors to King in
connection with the Offer. In addition, an affiliate of Credit Suisse is acting as the dealer
manager for the Offer.
Forward-Looking Statements
This report contains forward-looking statements, which may be identified by words such as
believes, expects, anticipates, estimates, projects, intends, should, seeks,
future, continue, or the negative of such terms, or other comparable terminology.
Forward-looking statements are subject to risks, uncertainties, assumptions and other factors that
are difficult to predict and that could cause actual results to vary materially from those
expressed in or indicated by them. Factors that could cause actual results to differ materially
include, but are not limited to: (1) the occurrence of any event, change or other circumstances
that could give rise to the termination of the Merger Agreement; (2) the outcome of any legal
proceedings that may be instituted against King, Alpharma and others following announcement of the
Merger Agreement; (3) the inability to complete the Offer due to the failure to satisfy the
conditions to the Offer, including obtaining Shares in the Offer representing at least a majority of the voting power of the total number of Alpharmas outstanding voting securities calculated on a fully-diluted basis
or the expiration of the waiting period under the HSR Act; (4) the inability of King to obtain the
$300 million term loan credit agreement; (5) the increased leverage as a result of the transaction;
(6) legislative, regulatory and economic developments; and (7) other factors described in filings
with the SEC. Many of the factors that will determine the outcome of the subject matter of this
communication are beyond Kings ability to control or predict. King can give no assurance that the
conditions contained in Amendment No. 1 or the conditions to the Offer will be satisfied or that
any of the transactions related to the Offer will be completed. King does not undertake any
obligation to revise or update any forward-looking statement, or to make any other forward-looking
statements, whether as a result of new information, future events or
otherwise. Except as otherwise required by applicable disclosure
obligations, King is not responsible for updating the information
contained in this communication beyond the published date.
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.
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KING PHARMACEUTICALS, INC.
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By: |
/s/ Joseph Squicciarino
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Name: |
Joseph Squicciarino |
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Title: |
Chief Financial Officer |
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Date: December 11, 2008