INOTIV, INC. : Entering into a Material Definitive Agreement, Creating a Direct Financial Obligation or Obligation Under an Off-Balance Sheet Arrangement of a Registrant, Settlement FD Disclosure, Financial Statements and Exhibits (Form 8-K)

Section 1.01 Entering into a Material Definitive Agreement.

At January 10, 2022, Inotiv, Inc. (the “Company”), and Inotiv Morrisville, LLC, a wholly owned subsidiary of the Company (the “Purchaser”), has entered into an agreement to purchase membership interests (the “Purchase Agreement”) with
Integrated Laboratory Systems Holdings, LLC, a Delaware limited liability company (the “Seller”), and Integrated Lab Systems, LLC, a North Carolina
limited liability company (“ILS”) providing for the acquisition by Buyer of all outstanding membership interests of ILS (the “Acquisition”). ILS is a preclinical contract research organization offering a suite of toxicology testing solutions, including genetic toxicology, in vivo and in vitro toxicology, histology and pathology, molecular biology and bioinformatics, computational toxicology and data science services, to government and commercial customers. The transactions provided for in the Purchase Agreement were carried out on January 10, 2022.

The consideration for the interests of ILS members consisted of $38.8 million in cash (after taking into account an adjustment for estimated net working capital), subject to certain adjustments and including a $3.8 million escrow for the purpose of securing any amounts payable by the selling parties in respect of indemnification obligations under the purchase agreement, and 429,118 common shares of the Company.

The Purchase Agreement contains customary representations, warranties, covenants (including non-competition and non-solicitation covenants), indemnifications and covenants.

The representations and warranties contained in the Purchase Agreement were made solely for the purposes of the Purchase Agreement, were made solely for the benefit of the parties to the Purchase Agreement, and may not have been intended as statements of fact, but rather as a method of allocating risk and governing the contractual rights and relationships between the parties to the purchase contract. The assertions contained in these representations and warranties may be subject to important reservations and limitations agreed to by the parties in negotiating their terms and may be subject to a contractual standard of materiality which may be different from what may be considered important to investors. . For the foregoing reasons, the representations and warranties contained in the Purchase Agreement should not be relied upon as factual information at the time made or otherwise. In addition, information regarding the subject matter of these representations and warranties may change after the date of the Purchase Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures.

The foregoing descriptions of the Purchase Agreement do not purport to be complete and are qualified in their entirety by the terms and conditions of the Purchase Agreement, a copy of which is filed as Schedule 2.1 hereto.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of the Registrant.

To finance part of the purchase price of the acquisition, the January 10, 2022, the Company borrowed the full amount of its $35.0 million Deferred Draw Term Loan Facility (the “DDTL”) under the Credit Agreement, dated November 5, 2021, between the Company, certain subsidiaries of the Company (the “Guaranteeing Subsidiaries”), the lenders parties thereto and Jefferies Finance LLC as administrative agent (the “Credit Agreement”). Amounts outstanding under the DDTL will bear interest at an annual rate equal to the LIBOR rate plus a margin of between 6.00% and 6.50%, depending on the Company’s then prevailing secured leverage ratio (as as defined in the credit agreement). The initial adjusted LIBOR interest rate is the LIBOR rate of 1.00% plus 6.25% for a total rate of 7.25%.

DDTL requires annual principal payments equal to 1.0% of the original principal amount. Voluntary DDTL prepayments will be subject to a 2% prepayment fee if made by November 5, 2022 and a 1% prepayment premium if made no later than November 5, 2023. Voluntary advance payments made after November 5, 2023 are not subject to a prepayment premium.

Under the credit agreement, the company is required to maintain an initial secured leverage ratio not exceeding 4.25 to 1.00. The maximum permitted guaranteed leverage ratio will be reduced from 3.00 to 1.00 as of the Company’s fiscal quarter ending March 31, 2025. The Company is required to maintain a minimum fixed charge coverage ratio (as defined in the credit agreement), which ratio will be 1.00 to 1.00 during the first year of the credit agreement and 1.10 to 1.00 from the first anniversary of the credit agreement. . The credit agreement includes certain rights of redress in the event that the company fails to meet these financial covenants for a fiscal quarter.

The DDTL is secured by all assets (other than certain excluded assets) of the Company and each of the Subsidiary Guarantors. Reimbursement of the DDTL is guaranteed by each of the Subsidiary Guarantors.

The Credit Agreement includes certain customary events of default, including, without limitation, failure to pay principal, interest or other amounts due under the Credit Agreement when due, misrepresentation and guarantees, non-compliance with the clauses of the credit agreement (including the financial clauses described above), defaults on certain other debts, seizure of certain money payment orders which remain undischarged or unsuspended for 90 days, certain ERISA Events (as defined in the Credit Agreement), certain Insolvency Events and the occurrence of a Change of Control (as defined in the Credit Agreement).

The DDTL will expire on November 5, 2026.

The foregoing description of the DDTL and the Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Credit Agreement filed as Exhibit 10.2 to the Company’s current report on Form 8- K deposited with the SECOND to November 5, 2021.

Section 7.01 Disclosure of FD Rules.

At January 10, 2022, the Company has issued a press release relating to the Acquisition, a copy of which is attached to this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference. Such information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933 , as amended, or the Exchange Act, except as expressly provided otherwise by specific reference in such filing.

Item 9.01 Financial statements and supporting documents.



(d) Exhibits


  2.1        Membership Interest Purchase Agreement, dated January 10, 2022, by
           and among Inotiv, Inc., Inotiv Morrisville, LLC, Integrated Laboratory
           Systems Holdings, LLC and Integrated Laboratory Systems, LLC
  99.1       Press Release, dated January 10, 2022








Forward Looking Statements



This document contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. In this context, forward-looking statements may relate to expected future business and financial performance and financial condition, and often contain words such as “expect”, “anticipate”, “intend”, ” plan”, “believe”, “seek”, “see”, “will”, “would”, “target”, similar expressions and variations or negatives of these words. Forward-looking statements, by their nature, address matters that are, to varying degrees, uncertain, such as statements regarding the completion of proposed acquisitions and the anticipated benefits thereof. Such statements involve risks, uncertainties and assumptions. If these risks or uncertainties materialize, or if these assumptions prove incorrect, the results of the Company and its subsidiaries could differ materially from those expressed or implied by these forward-looking statements and assumptions. All statements other than statements of historical facts are statements that could be considered forward-looking statements, including any statements regarding the expected benefits and costs of acquisitions contemplated by the Merger Agreement, the Purchase Agreement or otherwise; the expected timing of the completion of the acquisitions; the ability of the parties to complete the acquisitions; any statement of expectation or belief; and any statements of assumptions underlying any of the foregoing. The risks, uncertainties and assumptions include the possibility that the expected benefits will not materialize as expected; that either or both of the acquisitions may not be completed in a timely manner, if at all; that, prior to the completion of the acquisitions, the businesses of the sellers may not perform as expected due to transaction uncertainty or other factors; that the parties are unable to successfully implement integration strategies; and other risks described in the Company’s most recent Annual Report on Form 10-K and its other filings with the SECOND. The parties assume no obligation and do not intend to update these forward-looking statements.

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