LSR Announces Full Repayment of Bank Debt with Proceeds from Sale Leaseback and Internal Cash
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Tue Jun 14 16:05:02 2005 EST
EAST MILLSTONE, N.J., Jun 14, 2005 (BUSINESS WIRE) --
Life Sciences Research, Inc. (OTCBB: LSRI) announced
today that it paid in full its outstanding bank indebtedness of GBP
22.6 million (approximately $41.3 million) using the proceeds from the
sale-leaseback of its three operating facilities and cash on hand.
The sale-leaseback was entered into with Alconbury Estates, an
investment company controlled by Andrew Baker, the Company's Chairman
and CEO. The purchase price for the three facilities was $40 million,
consisting of $30 million cash at closing and a five year $10 million
variable rate subordinated promissory note, which Alconbury has agreed
to make a best effort to repay within twelve months. The Company has
entered into corresponding leases for those facilities for 30 years,
with 2 five-year options, with rentals commencing at $1.8 million per
year for the New Jersey facility and GBP 1.7 million ($3.1 million)
for the two U.K. facilities. Net costs to the Company associated with
this transaction were approximately $1 million. Costs incurred by
Alconbury were approximately $4.5 million, which was paid by the
Company, but will be repaid by Alconbury as agreed.
Brian Cass, LSR's President and Managing Director said, "As we
have stated in our public filings since 2001, we have long seen the
benefits of leveraging our real estate assets for long term financing,
as well as to better position the Company for future growth. This
transaction, which was made possible by the efforts and commitment of
the Company's Chairman, achieved important strategic objectives for
the Company. We have fully repaid our bank debt which was coming due
in one year and have effectively provided secure long term financing
in exchange for paying rent. Moreover, we have done so while ensuring
the continued availability of our core operating facilities to the
Company for the foreseeable future. This structure could also be
considered as a financing mechanism for possible facility expansion
for our Company should we so desire in the future."
In accordance with the provisions of FASB Interpretation No. 46R
(FIN 46), the Company will reflect the consolidation of Alconbury
Estates into its accounts until such time as the $10 million
subordinated note has been repaid. Although a significant ongoing
impact of that consolidation will be eliminated by the minority
interest entries associated with this transaction, it will mean that
the Company will not record the gain and loss associated with the sale
of the properties, nor recognize the associated decrease in
depreciation, until FIN 46 consolidation accounting no longer applies.
At that time, the Company will record a non-cash loss of approximately
$44 million for the sale of the UK properties, and a gain of
approximately $6 million, amortized over the term of the lease, for
the US property. In addition, the Company anticipates a reduction in
its annual depreciation charge of approximately $3.5 million. |
