REGENERON PHARMACEUTICALS,INC. (NASDAQ:REGN) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive
Agreement.
As reported in its Current Report on Form8-K filed with the U.S.
Securities and Exchange Commission (the SEC) on
December30, 2016, Regeneron Pharmaceuticals,Inc.
(Regeneron or the Company) previously entered into
a purchase agreement (the Purchase Agreement) to purchase
the Companys existing corporate headquarters and other rentable
area consisting of approximately 170 acres of predominately
office buildings and laboratory space located in the towns of
Mount Pleasant and Greenburgh, New York (the Facility) and
engaged a financing provider to arrange a $720 million lease
financing in connection therewith. On March3, 2017, Regeneron
completed the contemplated lease financing, as described in
greater detail below. As part of such financing, the right to
take title to the Facility under the Purchase Agreement was
assigned to the Lessor (as defined below), the Lessor has become
the legal owner of the Facility, and a wholly owned subsidiary of
Regeneron has leased the Facility for a five-year term. The rent
payments under the Lease (as defined below) are expected to be
lower than those under the Companys previous leases for its
corporate headquarters and to be immediately accretive to
Regenerons earnings. The lease financing does not constitute
indebtedness for purposes of Regenerons Revolving Credit Facility
(as defined below) and, therefore, the amounts outstanding under
the lease financing are not included in the calculation of
Regenerons total leverage ratio under the Revolving Credit
Facility and do not reduce the amount that Regeneron can borrow
under the Revolving Credit Facility based on the applicable
financial covenants.
Participation Agreement
On March3, 2017, Old Saw Mill Holdings LLC (the Lessee), a
wholly owned subsidiary of Regeneron, entered into a
participation agreement (the Participation Agreement) by
and among the Lessee; Bank of America, N.A., as administrative
agent; BA Leasing BSC, LLC, as lessor (in such capacity, the
Lessor); and the lenders party thereto from time to time
(collectively, the Lenders and, together with the Lessor,
the Participants). The Participation Agreement provides
for a $720 million lease financing in connection with the
acquisition by the Lessor of the Facility and the Lessees lease
of the Facility from the Lessor. On March3, 2017, the right to
take title to the Facility under the Purchase Agreement was
assigned to the Lessor and the Participants advanced $720 million
to the Participation Agreement, which was used to finance the
purchase price for the Facility and to reimburse the Company for
certain payments previously made by it to the Purchase Agreement.
Upon consummation of the transactions contemplated by the
Purchase Agreement, the Lessor has become the legal owner of the
Facility.
Lease
On March3, 2017, the Lessee also entered into a lease and
remedies agreement (the Lease) with the Lessor, to which
the Lessee has leased the Facility and certain related assets
from the Lessor for a five-year term and granted a security
interest in certain of its assets and rights to secure certain
obligations under the Participation Agreement, the Lease, and
certain related documents. Certain parts of the Facility are
subleased from the Lessee by existing third-party tenants
(collectively, the Subtenants). The Lease is a triple-net
lease requiring the Lessee, among other things, to pay during the
term of the Lease all maintenance, insurance, taxes, and other
costs arising out of the use of the Facility (which are offset in
part by payments received by the Lessee from the Subtenants). The
Lessee is also required to make monthly payments of basic rent
during the term of the Lease in an amount equal to the interest
and yield payable to the Lenders on their outstanding loans and
to the Lessor on its investment, respectively, the proceeds of
which were used to fund the advances under the Participation
Agreement. Such loans accrue interest, and the Lessors investment
accrues yield, at a variable rate per annum based on the
one-month London Interbank Offered Rate, plus an applicable
margin that varies with the Companys debt rating and total
leverage ratio.
Guaranty
The Company and its wholly owned subsidiaries Regeneron
Healthcare Solutions,Inc. and Regeneron Genetics Center LLC, on a
joint and several basis, have guaranteed all of the Lessees
obligations under the Participation Agreement, the Lease, and
certain related documents to a guaranty, dated as of March3, 2017
(the Guaranty), made by the Company and such subsidiaries,
as the initial guarantors.
Financial and Operating Covenants; Other
Terms
The Participation Agreement, the Lease, and the Guaranty
contain financial and operating covenants, which are
substantially similar to the covenants set forth in the Credit
Agreement, dated as of March19, 2015 (as amended) (the
Credit Agreement), by and among Regeneron, as a borrower
and guarantor, certain subsidiaries of Regeneron party thereto
as subsidiary borrowers, JPMorgan Chase Bank, N.A., as
administrative agent, and the lenders and other financial
institutions party thereto from time to time, governing
Regenerons existing revolving credit facility (the Revolving
Credit Facility), except for such matters specifically
relating to the Facility or the lease financing nature of the
transactions contemplated by the Participation Agreement.
Financial covenants include a maximum total leverage ratio and
a minimum interest expense coverage ratio. Operating covenants
include, among other things, limitations on (i)the incurrence
of indebtedness, (ii)liens on assets of the Company and its
subsidiaries and liens on the Facility, (iii)certain
fundamental changes and the disposition of assets by the
Company and its subsidiaries, (iv)entering into affiliate
transactions, and (v)the payment of dividends, distributions,
and certain other restricted payments in respect of the capital
stock of the Company and its subsidiaries (the Restricted
Payments Covenant). Similar to the Credit Agreement, the
Restricted Payments Covenant allows the Company, so long as no
event of default exists, to make payments that would otherwise
be restricted if at the time of the making of any such payment
and immediately thereafter it meets a specified total leverage
ratio requirement. The Participation Agreement, the Lease, and
the Guaranty contain other customary covenants, representations
and warranties, and events of default. The Lease also includes
certain early termination events relating to the occurrence of
certain material events of loss or material environmental
events relating to the Facility.
Maturity Date; Extension Option;
Termination
The advances under the Participation Agreement mature, and all
amounts outstanding thereunder will become due and payable in
full, on March3, 2022 (the Maturity Date). The term of
the Lease also ends on the Maturity Date. The Participation
Agreement and the Lease include an option for the Lessee to
elect to extend the maturity date of the Participation
Agreement and the term of the Lease for an additional five-year
period, subject to the consent of all the Participants and
certain other conditions. The Lessee also has the option prior
to the end of the term of the Lease to (a)purchase the Facility
by paying an amount equal to the outstanding principal amount
of the Participants advances under the Participation Agreement,
all accrued and unpaid interest and yield thereon, and all
other outstanding amounts under the Participation Agreement,
the Lease, and certain related documents or (b)sell the
Facility to a third party on behalf of the Lessor, in each
case, subject to certain terms and conditions set forth in the
Participation Agreement and the Lease. Amounts advanced under
the Participation Agreement and outstanding obligations under
the Lease may be prepaid at any time without premium or
penalty, subject to customary breakage costs.
Assignment of Existing Leases
In connection with the transactions described above, the leases
relating to the parts of the Facility previously leased by the
Company from BMR-Landmark at Eastview LLC (BMR)
(including the Lease, dated as of December21, 2006, as amended,
and the Mt. Pleasant Lease, dated as of April3, 2013, as
amended (both of which were previously filed with the SEC))
have been assigned from BMR to the Lessee. As a result of this
assignment, such leases have become intercompany agreements and
their financial impact will be eliminated in consolidation.
* * *
The foregoing description of the Participation Agreement, the
Lease, and the Guaranty is qualified in its entirety by
reference to the full text of such agreements, which are
attached hereto as Exhibits 10.1, 10.2, and 10.3, respectively,
and are incorporated herein by reference.
Item 2.03. Creation of a Direct
Financial Obligation or an Obligation under an Off-Balance
Sheet Arrangement of a Registrant.
On March3, 2017, the Company and certain of its subsidiaries,
as applicable, entered into the Participation Agreement, the
Lease, and the Guaranty described under Item 1.01 above. The
description of such agreements set forth in Item 1.01 above is
incorporated herein by reference.
Item 9.01. Financial Statements and
Exhibits.
(d)Exhibits.
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10.1 |
Participation Agreement, dated as of March3, 2017, by and |
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10.2 |
Lease and Remedies Agreement, dated as of March3, 2017, |
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10.3 |
Guaranty, dated as of March3, 2017, made by Regeneron |
About REGENERON PHARMACEUTICALS, INC. (NASDAQ:REGN)
Regeneron Pharmaceuticals, Inc. is a biopharmaceutical company that discovers, invents, develops, manufactures and commercializes medicines for the treatment of serious medical conditions. The Company commercializes medicines for eye diseases, high low-density lipoprotein (LDL) cholesterol, and an inflammatory condition and have product candidates in development in other areas, including rheumatoid arthritis, asthma, atopic dermatitis, pain, cancer, and infectious diseases. The Company’s marketed products include EYLEA (aflibercept) Injection, Praluent (alirocumab) Injection, ARCALYST (rilonacept) Injection for Subcutaneous Use, Kevzara (sarilumab) Solution for Subcutaneous Injection and ZALTRAP (ziv-aflibercept) Injection for Intravenous Infusion. As of December 31, 2016, the Company had 16 product candidates in clinical development, which consisted of a Trap-based clinical program and 15 fully human monoclonal antibody product candidates. REGENERON PHARMACEUTICALS, INC. (NASDAQ:REGN) Recent Trading Information
REGENERON PHARMACEUTICALS, INC. (NASDAQ:REGN) closed its last trading session up +8.85 at 381.37 with 832,830 shares trading hands.
