Unilife Secures $60M debt financing

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THE ROADHOUSE PHARMACIST: Unilife Corporation (ASX: UNS) has entered into a $60 million debt financing agreement with an affiliate of healthcare sector investment firm OrbiMed.

Unilife said $40 million was funded to Unilife at the closing of the deal. Under the terms of the agreement, provided Unilife is in compliance, two additional tranches of $10 million each will be provided to the company in December 2014 and June 2015.

“OrbiMed is one of the premier healthcare investors in the world,” Unilife chairman and CEO Alan Shortall said in the company’s announcement to the Australian Securities Exchange.

“With OrbiMed and their independent advisors having conducted extensive due diligence into all aspects of our business, including our products, IP and commercial pipeline, we believe this agreement represents a significant endorsement of Unilife.

“In particular, I believe OrbiMed’s decision to accept a small share of our future net sales highlights their confidence in our business model and future growth.

“This $60 million commitment provides us with the necessary capital to drive business growth as we bring several large contracts with existing customers through to commercial rollout.

“Our decision to take only $40 million of the $60 million upfront will ensure we have the cash to support our operations while minimizing interest payments.

“I believe Unilife’s growing base of customers will view our long-term partnership with OrbiMed as a positive development, as it further strengthens our business position and capacity to meet their future needs.”

During the six year term of the agreement, Unilife will make interest-only payments to OrbiMed currently calculated at a rate of 10.25 per cent per annum, with the principal to be repaid by 12 March 2020.
 
OrbiMed will also receive a tiered royalty payment based on net sales generated by Unilife during each fiscal year of the agreement. The maximum royalty rate is 2.75 per cent of annual net sales.

The royalty rate decreases as annual net sales increases. Total royalties paid to OrbiMed under the agreement are capped as Unilife has the option to buy out the royalty payment, which is at a reduced amount at any time on or before the fourth anniversary of the agreement.