Summary
Vertex Pharmaceuticals Incorporated (VRTX) announced on January 7, 2011, that it has entered into a credit agreement with Bank of America, N.A. This agreement establishes a $100 million revolving credit facility, which is initially unsecured. As of the filing date, Vertex was not drawing on this facility, indicating a precautionary measure or potential future need for liquidity. The credit facility has a maturity date of July 6, 2012, and allows for borrowings at either LIBOR plus 1.50% or Bank of America's prime rate. Key covenants within the agreement require Vertex to maintain a minimum of $400 million in cash, cash equivalents, and marketable securities and also impose limitations on quarterly net losses. The agreement includes standard representations, warranties, covenants, and events of default. The obligation to borrow is subject to satisfactory due diligence by the lender.
Key Highlights
- 1Vertex Pharmaceuticals entered into a $100 million revolving credit facility with Bank of America.
- 2The credit facility is initially unsecured and was not being utilized as of the filing date.
- 3The facility has a term until July 6, 2012.
- 4Interest rates for borrowings will be based on LIBOR plus 1.50% or Bank of America's prime rate.
- 5The agreement includes covenants requiring Vertex to maintain at least $400 million in cash, cash equivalents, and marketable securities.
- 6There are limitations on the company's quarterly net losses.
- 7The facility may become secured by cash, cash equivalents, and marketable securities upon certain defaults.