Charles River Laboratories International, Inc. (NYSE:CRL) announced today that it has implemented a new accelerated stock repurchase — ASR — program to repurchase $150 million of common stock, as part of its previously announced authorization from its Board of Directors to repurchase up to $750 million of common stock. This new program follows a $300 million ASR program that was completed on February 11, 2011, and resulted in the repurchase of a total of approximately 8.9 million shares.
Under the $150 million ASR program entered into with Morgan Stanley & Co. (NYSE:MS), the Company will receive an initial delivery of approximately 3.7 million shares. The actual number of shares that Charles River repurchases under the ASR program will be determined based on a discount to the daily volume-weighted average price — VWAP — of its common stock over the course of a calculation period, which may extend approximately three months or conclude earlier at Morgan Stanley’s option. The Company intends to fund the stock repurchases through a new $150 million term loan.
New $150 Million Term Loan
On February 24, 2011, Charles River amended its existing credit agreement with certain financial institutions to add a $150 million term loan. The credit agreement now provides for up to $900 million in financing, including the prior $400 million U.S. term loan and $350 million U.S. revolving credit facility, both of which remain in effect and outstanding.
The new $150 million term loan matures in 18 quarterly installments. The interest rate applicable to the new term loan is the same as the existing $400 million term loan and $350 million revolving credit facilities. This interest rate is equal to either the base rate (which is the higher of (1) the prime rate, (2) the federal funds rate plus 0.50%, or (3) the one-month adjusted LIBOR rate) or the adjusted LIBOR rate, plus an interest rate margin based upon the Company’s leverage ratio. Based upon the Company’s current leverage ratio including funds used for the new ASR program, the interest rate margin is expected to be 2.50% for the term loans and drawn amounts on the revolving loan, and 0.50% for undrawn amounts on the revolving loan.
About Charles River
Accelerating Drug Development. Exactly. Charles River provides essential products and services to help pharmaceutical and biotechnology companies, government agencies and leading academic institutions around the globe accelerate their research and drug development efforts. Our approximately 7,500 employees worldwide are focused on providing clients with exactly what they need to improve and expedite the discovery, development through first-in-human evaluation, and safe manufacture of new therapies for the patients who need them.
(SOURCE and DISCLOSURES: Charles River Laboratories International, Inc.)