) announced the successful completion of the refinancing of its
previously outstanding senior secured bank debt. Through this move,
the company brought down its total debt outstanding by $75 million
to $375 million.
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Alkermes further announced that the new term loans will carry a
lower blended interest rate of 4.4% as opposed to the previous
blended interest rate of 7.6%. Moreover, the company expects the
debt refinancing to result in annual cash interest savings of
approximately $18 million.
Alkermes stated that the new debt includes senior secured,
covenant-lite first lien term loan facilities. The facilities
consist of a $300 million, seven-year term loan bearing interest at
LIBOR (London inter-bank offer rate) plus 3.50% in addition to a
$75 million, four-year term loan carrying interest at LIBOR plus
3%. LIBOR is subject to an interest rate floor of 1% for each of
the term loans.
Alkermes expects to incur a one-time cost of approximately $14
million in the second quarter of fiscal 2013. The charge comprises
a prepayment premium of $2.8 million coupled with the write-off of
deferred financing charges and original issue discount pertaining
to the previous debt.
Following the successful completion of the refinancing, Alkermes
broadened its adjusted earnings guidance for fiscal 2013 (ending
March 31, 2013). The company now expects to end fiscal 2013 with
adjusted earnings in the range of 69 - 84 cents per share, as
opposed to the previously forecasted range of 62-77 cents per
share. Moreover, Alkermes upped its projected range for free cash
flow for fiscal 2013 to $70 - $90 million from $60- $80 million.
Alkermes, which has been performing well since its purchase of
) drug delivery unit last year, carries a Zacks #1Rank ("Strong
Buy" rating) in the short run.