Item 1.01. Entry into a Material Definitive Agreement.
On December 29, 2022, Inotiv, Inc. (the "Company"), certain subsidiaries of the
Company (the "Subsidiary Guarantors"), the lenders party thereto, and Jefferies
Finance LLC, as administrative agent (the "Agent"), entered into a Second
Amendment ("Amendment") to the Credit Agreement, dated November 5, 2021, as
amended by that First Amendment on January 27, 2022 (as amended, the "Credit
Agreement").
The Amendment provides for, among other things, an extension to the earlier of
January 13, 2023 and the date by which the Company is required to file its
Annual Report on Form 10-K for such fiscal year with the Securities and Exchange
Commission under Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (giving effect to any grace period provided by
Rule 12b-25 under the Exchange Act (or any successor thereto)), of the
requirements to provide to the lenders the audited financial statements for the
Company's fiscal year ended September 30, 2022 and an annual budget for 2023.
The Amendment adds a requirement that the Company provide, within 30 days after
the end of each month, an unaudited consolidated balance sheet, statement of
income and statement of cash flows as of the end of, and for, such month, as
well as a "key performance indicator" report. The Amendment also requires that,
within 10 business days after the end of each month, the Company will provide a
rolling 13-week cash flow forecast prepared on a monthly basis. The Amendment
further provides that, upon the request of the Required Lenders (as defined in
the Credit Agreement), the Company will permit a financial advisor designated by
the Required Lenders to meet with management of the Company to discuss the
affairs, finances, accounts and condition of the Company during the six-month
period following the effective date of the Amendment. In addition, the Amendment
requires the Company to deliver an updated organization chart and certain
supplemental information regarding the Company's subsidiaries in connection with
each quarterly report required pursuant to the Credit Agreement.
Under the Amendment, the Company may elect to borrow on each of the loan
facilities at either an adjusted term secured overnight financing rate ("Term
SOFR") rate of interest or an alternate base rate of interest. Adjusted Term
SOFR loans shall accrue interest at an annual rate equal to the applicable Term
SOFR rate plus (i) an adjustment percentage equal to between 0.11448% and
0.42826%, depending on the term of the loan ("Adjusted Term SOFR"); provided
that, Adjusted Term SOFR shall never be less than 1.00%, and (ii) a margin of
between 6.00% and 6.50%, depending on the Company's then current Secured
Leverage Ratio (as defined in the Credit Agreement). Alternate base rate loans
shall accrue interest at an annual rate equal to (i) the highest of (a) the
Federal Funds Effective Rate (as defined in the Credit Agreement) plus 0.5%,
(b) the Agent's prime rate and (c) Adjusted Term SOFR for a one-month tenor plus
1.00% (the "Alternate Base Rate"); provided that, the Alternate Base Rate shall
never be less than 2.00%, plus (ii) a margin of between 5.00% and 5.50%,
depending on the Company's then current Secured Leverage Ratio.
The Amendment also provides that the Company may not request any credit
extensions under the revolving credit facility under the Credit Agreement:
(i) prior to delivery of the audited financial statements and related compliance
certificate for the fiscal year ended September 30, 2022; and (ii) thereafter,
if any of the conditions precedent set forth in Section 4.02 of the Credit
Agreement cannot be satisfied, including, without limitation, the making of the
representation and warranty that as of the date of the most recent audited
financial statements delivered to the Agent, no event, change, circumstance,
condition, development or occurrence has had, or would reasonably be expected to
result in, either individually or in the aggregate, a Material Adverse Effect
(as defined in the Credit Agreement).
In addition, the Amendment provides that, no later than January 13, 2023 (or
such later date as the Required Lenders shall agree in their discretion), the
Company shall (i) appoint a financial advisor on terms reasonably acceptable to
the Required Lenders and the Company for a term of at least six months,
(ii) provide a 13-week budget to the Agent, and (iii) deliver a perfection
certificate supplement updating certain information previously provided with
respect to each of the Company and the Subsidiary Guarantors, including
information regarding certain collateral and other assets owned by such parties.
The Company is continuing to discuss additional amendments that it expects will
be necessary related to the financial covenants in the Credit Agreement, as well
as related matters, in connection with the previously-disclosed issues related
to non-human primates imported from Cambodia.
The foregoing summary of the Amendment and the Credit Agreement does not purport
to be complete and is qualified in its entirety by reference to the full text of
the Amendment, which includes the text of the Credit Agreement, as amended,
filed as Exhibit 10.1 to this Current Report on Form 8-K.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of the Registrant.
The information in Item 1.01 regarding the Amendment is incorporated by
reference in response to this Item 2.03.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. Description
10.1 Second Amendment to Credit Agreement, dated as of December 29,
2022, among Inotiv, Inc., certain subsidiaries of the Company, the
lenders party thereto, and Jefferies Finance LLC.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
This document may contain statements that are forward-looking statements within
the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such
statements are based upon the current beliefs, expectations, and assumptions of
management and are subject to significant risks, uncertainties, and changes in
circumstances that could cause actual outcomes and results to differ materially
from the forward-looking statements. Such risks and uncertainties include, but
are not limited to, risks and uncertainties related to the Company's ability to
comply with the amended, updated and new provisions of the Credit Agreement, the
ability of the Company to complete its fiscal year 2022 financial statement
closing and audit process and provide the required financial information by the
extended due date, the impact of the additional requirements under the Amendment
on the Company, its operations and financial condition, the ability of the
Company and the lenders to agree to additional amendments to the Credit
Agreement within the applicable timeframe or at all, and various other market
and operating risks, including those detailed in the Company's filings with the
U.S. Securities and Exchange Commission. You are cautioned not to rely on these
forward-looking statements, since there can be no assurance that these
forward-looking statements will prove to be accurate. Forward-looking statements
speak only as of the date they are made, and the Company expressly disclaims any
intention or obligation to update or revise any forward-looking statements,
whether as a result of new information, future events, or otherwise, except as
required by law.
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