XML 26 R14.htm IDEA: XBRL DOCUMENT
v3.21.4

DEBT | 12 Months Ended
--- | ---
Sep. 30, 2021
DEBT |
DEBT | 7. DEBT Credit Facility On April 30, 2021, the Company entered into an Amended and Restated Credit Agreement (the “Credit Agreement”) with First Internet Bank of Indiana (“FIB”) to, among other things, secure additional debt financing in order to fund portions of the consideration for the HistoTox Labs Acquisition and the Bolder Merger. The Credit Agreement included eleven term loans (the “Term Loans” ), an equipment draw loan (the “Equipment Loan”), and a revolving line of credit (the “Revolving Facility”). On May 26, 2021, the Company and FIB entered into an amendment to the Credit Agreement to, among other things, provide a new term loan facility to finance the acquisition and refurbishment of the Company’s St. Louis facility, which it had previously leased. The material terms of each of the loans under the Credit Agreement, as amended, are described below. Included in the Credit Agreement is a requirement that the Company maintain certain financial covenants, including maintaining a senior funded debt to adjusted EBITDA ratio (as defined in the Credit Agreement) of not greater than (i) 5.25 to 1.00 as of the date of the Credit Agreement and as of June 30, 2021, (ii) 4.75 to 1.00 as of September 30, 2021, (iii) 4.50 to 1.00 as of December 31, 2021, (iv) 4.25 to 1.00 as of March 31, 2022, (v) 4.00 to 1.00 as of June 30, 2022, and (vi) 3.50 to 1.00 as of September 30, 2022 and as of each fiscal quarter end thereafter. Also included in the Credit Agreement is a requirement that the Company maintain a fixed charge coverage ratio (as defined in the Credit Agreement) of not less than (i) 1.20 to 1.00, commencing as of September 30, 2021, and continuing as of each fiscal quarter end thereafter up to and including June 30, 2022, and (ii) 1.25 to 1.00 as of September 30, 2022 and as of each fiscal quarter end thereafter. Upon an event of default, which includes certain customary events such as, among other things, a failure to make required payments when due, a failure to comply with covenants, certain bankruptcy and insolvency events, and defaults under other material indebtedness, FIB may cease advancing funds, increase the interest rate on outstanding balances, accelerate amounts outstanding, terminate the agreement and foreclose on all collateral. The obligations of the Company under the Credit Agreement are secured by all of the assets of the Company and are guaranteed by each of its subsidiaries and secured by the assets thereof. The Company has also obtained a life insurance policy in an amount not less than $5,000 for its President and Chief Executive Officer and provided FIB an assignment of such life insurance policy as collateral.
| (a) | Terms of the Equipment Loan.
​ The Company may borrow under the Equipment Loan on or before April 30, 2022 in the aggregate principal amount of up to $3,000 (the “Equipment Loan Commitment”). The Equipment Loan Commitment will automatically terminate upon the earlier of (x) any funding of the maximum amount of the Equipment Loan Commitment and (y) 5:00 p.m., Indianapolis time, on April 30, 2022. Until April 30, 2022, the Company must pay interest on the amount outstanding under the Equipment Loan at a fixed annual rate of 4.00%. On April 30, 2022, all amounts outstanding under the Equipment Loan will be converted to a term loan and repaid monthly in installments of principal based on a five (5) year amortization schedule together with the interest that will accrue thereon. A final installment representing the entire unpaid principal of the Equipment Loan, and all accrued and unpaid interest thereon and all fees and charges in connection therewith, will be due and payable on April 30, 2027. Advances under the Equipment Loan will be used to fund equipment needs of the Company as approved by FIB.
| (b) | Terms of the Revolving Facility.
​ The Revolving Facility provides a line of credit for up to $5,000, which the Company may borrow from time to time, subject to the terms of the Credit Agreement, including as may be limited by the amount of the Company’s outstanding eligible receivables. The Revolving Facility requires monthly accrued and unpaid interest payments only until maturity at a floating per annum rate equal to the greater of (a) 4.00%, or (b) the Prime Index (as defined in the Credit Agreement). The Company did not have an outstanding balance on the Revolving Facility as of September 30, 2021. Advances under the Revolving Facility will be used for general working capital purposes of the Company. ​ ​
| (c) | Terms of the Term Loans:
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | Principal Amount |  | ​ |  | ​ |  | ​ |  | ​
​ | ​ | as of date of Credit | ​ | ​ | ​ | Monthly | ​ | ​ | ​ | ​
​ | ​ | Agreement | ​ | Annual | ​ | Payment | ​ | ​ | ​ | ​
​ | ​ | April 30, 2021 | ​ | Interest | ​ | Amount | ​ | ​ | ​ | ​
Loan Name | ​ | (000) | ​ | Rate | ​ | (000) | ​ | Maturity Date | ​ | Use of Proceeds
Term Loan 1 | ​ | $ | 3,980 |  | 5.20 | % | $ | 36 | ​ | March 28, 2025 |  | Funded expansion of building on real property in Mount Vernon, IN
Term Loan 2 | ​ | $ | 3,571 |  | 5.06 | % | $ | 78 | ​ | July 2, 2023 |  | Funded a portion of the cash consideration for the Seventh Wave Laboratories acquisition
Term Loan 3 | ​ | $ | 1,076 |  | 5.20 | % | $ | 32 | ​ | March 28, 2025 |  | Funded equipment needs associated with expansion of real property in Mount Vernon, IN
Term Loan 4 | ​ | $ | 1,001 |  | 4.63 | % | $ | 20 | ​ | November 1, 2025 |  | Funded the cash consideration for the Smithers Avanza acquisition
Term Loan 5 | ​ | $ | 810 |  | 4.00 | % | $ | 17 | ​ | June 30, 2025 |  | Funded certain capital expenditures
Term Loan 6 | ​ | $ | 2,865 |  | 4.25 | % | $ | 56 | ​ | December 31, 2025 |  | Funded certain capital expenditures
Term Loan 7 | ​ | $ | 1,263 |  | 4.00 | % | $ | 28 | ​ | June 1, 2025 |  | Financed aspects of the Pre-Clinical Research Services and related real property acquisitions
Term Loan 8 | ​ | $ | 1,853 |  | 4.00 | % | $ | 12 | ​ | December 1, 2024 |  | Financed aspects of the Pre-Clinical Research Services and related real property acquisitions
Term Loan 9 | ​ | $ | 10,000 |  | 3.85 | % | $ | 184 (a) | ​ | April 30, 2026 |  | Funded a portion of the cash consideration of the Bolder BioPATH merger
Term Loan 10 | ​ | $ | 5,000 |  | 3.85 | % | $ | 92 (a) | ​ | April 30, 2026 |  | Funded a portion of the cash consideration of the HistoTox Labs acquisition
Term Loan 11 | ​ | $ | 3,622 |  | 3.99 | % | $ | 33 | ​ | June 23, 2022 |  | Refinanced debt with The Huntington Bank for general business purposes
Term Loan 12 | ​ | $ | 4,832 (b) |  | 3.85 | % | $ | 10 (c) | ​ | December 26, 2026 |  | Financed the acquisition of the St. Louis facility and associated expansion
(a) | See Mandatory Prepayments information below
(b) | Principal amount as of May 26, 2021
(c) | The Monthly payment amount increases to $29 on January 1, 2022
​
| (d) | Mandatory Prepayments.
​ Commencing with the fiscal year ending September 30, 2021 and for each fiscal year thereafter until the Term Loan 9 and/or Term Loan 10, in each case, are paid in full, the Company is required to prepay Term Loan 9 and Term Loan 10 on a pro rata basis on the following January 31st, in an amount equal to 50% of the excess cash flow of the Company (as defined in the Credit Agreement) for such fiscal year (in each case, an “Excess Cash Flow Payment”), provided that, for the fiscal year ending September 30, 2021, the Excess Cash Flow Payment, if any, will be calculated only for the period from April 30, 2021 through September 30, 2021. Excess Cash Flow will be calculated for each fiscal year based on (a) the Company’s adjusted EBITDA (as defined in the Credit Agreement), minus (b) cash interest expense, minus (c) cash taxes paid or cash distributions made for payment of taxes, minus (d) principal payments paid in respect of long-term indebtedness (excluding any principal reduction on Term Loan 9 or Term Loan 10, in each case, with respect to Excess Cash Flow and excluding principal payments on the Revolving Facility), minus (e) capital expenditures not funded by advances under the Equipment Loan as specified under the Credit Agreement. Effective as of September 21, 2021, the Company entered into a Second Amendment to Amended and Restated Credit Agreement (the "Amendment"), which amended the Amended and Restated Credit Agreement between the Company and First Internet Bank of Indiana (“FIB”) as amended (the "Credit Agreement"). Pursuant to the Amendment, FIB consented to the incurrence by the Company of up to $150,000 of indebtedness pursuant to an indenture to be entered into among the Company, BAS Evansville, as guarantor, and U.S. Bank National Association, as trustee (the "Indenture"), and to the guarantee of such indebtedness by BAS Evansville, provided that $18,000 of the proceeds of the issuance of notes under the Indenture were deposited in an account with the Lender and that all remaining proceeds of such issuance were used solely for the purpose of financing the Envigo Acquisition as described in Note 16. The $18,000 cash deposit is included in the restricted cash line item in the Company’s consolidated balance sheet for the year ended September 30, 2021. In addition, the Amendment amended the Credit Agreement to (i) add the notes issued under the Indenture as permitted indebtedness, (ii) exclude Subordinated Debt (as defined in the Credit Agreement) and, through the earlier of (a) a certain determination that the Envigo Acquisition shall not be consummated or (b) March 31, 2022, the indebtedness incurred pursuant to the Indenture from the calculation of the Senior Funded Debt to Adjusted EBITDA Ratio (as defined in the Amendment) and modified the financial ratio covenants to provide for the treatment of operating leases as operating leases (and not capital leases) in the calculation thereof, regardless of the requirements of FASB ASC 842 or other GAAP changes. The Amendment included an agreement by the Company to repay all of its obligations under the Indenture within 90 days following the earlier of (a) a certain determination that the Envigo Acquisition would not be consummated or (b) March 31, 2022. The Company consummated the Envigo Acquisition and repaid all of its obligations under the FIB Credit Facility in November 2021 as described in Note 16. Acquisition-related Debt In addition to the indebtedness under the Credit Agreement, certain of the Company’s subsidiaries have issued unsecured notes as partial payment of the purchase prices of certain acquisitions as described herein. Each of these notes is subordinated to the indebtedness under the Credit Agreement. As part of the Smithers Avanza acquisition, the Company’s BASi Gaithersburg subsidiary issued an unsecured promissory note payable to the Smithers Avanza seller in the initial principal amount of $810, which is guaranteed by the Company. The promissory note bears interest at a rate of 6.5% per annum with monthly payments pf principal and interest and a maturity date of May 1, 2022. As part of the PCRS Acquisition, the Company’s Bronco Research Services subsidiary issued an unsecured subordinated promissory note payable to the PCRS seller in the initial principal amount of $800. The promissory note bears interest at a rate of 4.5% per annum with monthly payments of principal and interest and a maturity date of December 1, 2024. ​ As part of the acquisition of Boulder BioPATH, the Company’s Inotiv Boulder subsidiary, Inotiv Boulder, LLC, issued unsecured subordinated promissory notes payable to the former shareholders of Boulder BioPATH in an aggregate principal amount of $1,500. The promissory notes bear interest at a rate of 4.5% per annum, with monthly payments of principal and interest and a maturity date of May 1, 2026. ​ As consideration for the acquisition of certain assets of BioReliance Corporation, the Company will pay 10% of net sales through December 2023 derived from the provision by the Company of services comprising the business to existing customers related to the intangible asset acquired. The Company recorded contingent consideration of $640 in the consolidated balance sheets for the year ended September 30, 2021 as described in Notes 2 and 12. ​ PPP Loan ​ On April 23, 2020, the Company was granted a loan (the “Loan”) from Huntington National Bank in the aggregate amount of $5,051, pursuant to the Paycheck Protection Program (PPP) under Division A, Title I of the CARES Act, which was enacted March 27, 2020. The terms of the PPP Loan called for repayment of the principal and accrued interest under the Loan in eighteen installments of $283 beginning on November 16, 2020 and continuing monthly until the final payment was due on April 16, 2022. The Company applied for forgiveness of the loan in the amount of $4,851, and on July 16, 2021, received notice from Huntington Bank that the SBA had approved the application for forgiveness of the PPP Loan in the full amount requested. The Company recorded a gain on the extinguishment of debt in the amount of $4,851 included in other income in the consolidated statements of operations for the year ended September 30, 2021. Convertible Senior Notes ​ On September 27, 2021, the Company issued $140,000 principal amount of its 3.25% Convertible Senior Notes due 2027. The Notes were issued pursuant to, and are governed by, an indenture, dated as of September 27, 2021, among the Company, the BAS Evansville, as guarantor, and U.S. Bank National Association, as trustee. Pursuant to the purchase agreement between the Company and the initial purchaser of the Notes, the Company granted the initial purchaser an option to purchase, for settlement within a period of 13 days from, and including, the date the Notes were first issued, up to an additional $15,000 principal amount of Notes. The Notes issued on September 27, 2021 include $15,000 principal amount of Notes issued pursuant to the full exercise by the initial purchaser of such option. The Company used the net proceeds from the offering of Notes, together with borrowings under a new senior secured term loan facility, to fund the cash portion of the purchase price of the Envigo Acquisition and related fees and expenses, as described in Note 16. The Company recorded $131,673 of long-term debt related to the Notes in the consolidated balance sheets for the year ended September 30, 2021, which included $54,922 related to the fair value of the conversion feature. The Notes are the Company’s senior, unsecured obligations and are (i) equal in right of payment with the Company’s existing and future senior, unsecured indebtedness; (ii) senior in right of payment to the Company’s existing and future indebtedness that is expressly subordinated to the Notes; (iii) effectively subordinated to the Company’s existing and future secured indebtedness, to the extent of the value of the collateral securing that indebtedness; and (iv) structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, and (to the extent the Company is not a holder thereof) preferred equity, if any, of the Company’s non-guarantor subsidiaries. The Notes are fully and unconditionally guaranteed, on a senior, unsecured basis, by BAS Evansville (the “Guarantor”). The Notes accrue interest at a rate of 3.25% per annum, payable semi-annually in arrears on April 15 and October 15 of each year, beginning on April 15, 2022. The Notes will mature on October 15, 2027, unless earlier repurchased, redeemed or converted. Before April 15, 2027, noteholders have the right to convert their Notes only upon the occurrence of certain events. From and after April 15, 2027, noteholders may convert their Notes at any time at their election until the close of business on the scheduled trading day immediately before the maturity date. The Company will settle conversions by paying or delivering, as applicable, cash, its common shares or a combination of cash and its common shares, at the Company’s election. The initial conversion rate is 1.7162 common shares per $1,000 principal amount of Notes, which represents an initial conversion price of approximately $46.05 per common share. The conversion rate and conversion price are subject to customary adjustments upon the occurrence of certain events. In addition, if certain corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time. The Notes are redeemable, in whole and not in part, at the Company’s option at any time on or after October 15, 2024 and on or before the 40th scheduled trading day immediately before the maturity date, but only if the last reported sale price per common share of the Company exceeds 130% of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice; and (ii) the trading day immediately before the date the Company sends such notice. The redemption price is a cash amount equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. In addition, calling the Notes for redemption pursuant to the provisions described in this paragraph will constitute a Make-Whole Fundamental Change, which will result in an increase to the conversion rate in certain circumstances for a specified period of time. If certain corporate events that constitute a “Fundamental Change” (as defined in the Indenture) occur, then noteholders may require the Company to repurchase their Notes at a cash repurchase price equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. The definition of Fundamental Change includes certain business combination transactions involving the Company and certain de-listing events with respect to the Company’s common shares. The Notes have customary provisions relating to the occurrence of “Events of Default” (as defined in the Indenture), which include the following: (i) certain payment defaults on the Notes (which, in the case of a default in the payment of interest on the Notes, are subject to a 30-day cure period); (ii) the Company’s failure to send certain notices under the Indenture within specified periods of time; (iii) the failure by the Company or the Guarantor to comply with certain covenants in the Indenture relating to the ability of the Company or the Guarantor to consolidate with or merge with or into, or sell, lease or otherwise transfer, in one transaction or a series of transactions, all or substantially all of the assets of the Company or the Guarantor, as applicable, and its subsidiaries, taken as a whole, to another person; (iv) a default by the Company or the Guarantor in its other obligations or agreements under the Indenture or the Notes if such default is not cured or waived within 60 days after notice is given in accordance with the Indenture; (v) certain defaults by the Company, the Guarantor or any of their respective subsidiaries with respect to indebtedness for borrowed money of at least $20,000; (vi) the rendering of certain judgments against the Company, the Guarantor or any of their respective subsidiaries for the payment of at least $20,000, where such judgments are not discharged or stayed within 60 days after the date on which the right to appeal has expired or on which all rights to appeal have been extinguished; (vii) certain events of bankruptcy, insolvency and reorganization involving the Company, the Guarantor or any of their respective significant subsidiaries; and (viii) the guarantee of the Notes ceases to be in full force and effect (except as permitted by the Indenture) or the Guarantor denies or disaffirms its obligations under its guarantee of the Notes. If an Event of Default involving bankruptcy, insolvency or reorganization events with respect to the Company or the Guarantor (and not solely with respect to a significant subsidiary of the Company or the Guarantor) occurs, then the principal amount of, and all accrued and unpaid interest on, all of the Notes then outstanding will immediately become due and payable without any further action or notice by any person. If any other Event of Default occurs and is continuing, then, the Trustee, by notice to the Company, or noteholders of at least 25% of the aggregate principal amount of Notes then outstanding, by notice to the Company and the Trustee, may declare the principal amount of, and all accrued and unpaid interest on, all of the Notes then outstanding to become due and payable immediately. However, notwithstanding the foregoing, the Company may elect, at its option, that the sole remedy for an Event of Default relating to certain failures by the Company to comply with certain reporting covenants in the Indenture consists exclusively of the right of the noteholders to receive special interest on the Notes for up to 180 days at a specified rate per annum not exceeding 0.50% on the principal amount of the Notes. The convertible feature of the Notes is subject to fair value remeasurement of each balance sheet date due to the level three inputs required in the fair value measurement as described in Note 2. As a result of the fair value remeasurement of the convertible senior notes, the Company recognized a gain of $8,362 included in other income for the year ended September 30, 2021. The weighted-average assumptions used to compute the fair-value of the Notes as of September 30, 2021 is shown below. ​
​ | ​ | ​ | ​
​ | ​ | 2021 | ​
Risk-free interest rate |  | 1.20 | %
Dividend yield |  | — | %
Volatility of the expected market price of the Company’s common shares |  | 81.10 | %
Maturity period (years) |  | 6.04 | ​
​ Long-term debt is detailed in the table below. ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | As of September 30:
​ |  | 2021 |  | 2020
Term Loan #1 | ​ | $ | 3,888 | ​ | $ | 4,230
Term Loan #2 | ​ |  | 3,255 | ​ |  | 4,004
Term Loan #3 | ​ | ​ | 963 | ​ | ​ | 1,266
Term Loan #4 | ​ | ​ | 920 | ​ | ​ | 1,115
Term Loan #5 | ​ | ​ | 737 | ​ | ​ | 920
Term Loan #6 | ​ | ​ | 2,590 | ​ | ​ | —
Term Loan #7 | ​ |  | 1,145 | ​ |  | 1,425
Term Loan #8 | ​ | ​ | 1,825 | ​ | ​ | 1,891
Term Loan #9 | ​ | ​ | 9,395 | ​ | ​ | —
Term Loan #10 | ​ | ​ | 4,697 | ​ | ​ | —
Term Loan #11 | ​ | ​ | 3,495 | ​ | ​ | 3,748
Term Loan #12 | ​ | ​ | 3,275 | ​ | ​ | —
Subtotal Term Loans | ​ | ​ | 36,185 | ​ | ​ | 18,599
Seller Note – Bolder BioPATH | ​ |  | 1,500 | ​ |  | —
Seller Note – Smithers Avanza | ​ |  | 280 | ​ |  | 650
Seller Note – Preclinical Research Services | ​ | ​ | 685 | ​ | ​ | 752
Paycheck protection program loan | ​ | ​ | — | ​ | ​ | 5,051
Convertible Senior Notes | ​ | ​ | 131,673 | ​ | ​ | —
​ | ​ |  | 170,323 | ​ |  | 25,052
Less: Current portion | ​ |  | (9,656) | ​ |  | (5,991)
Less: Debt issue costs not amortized | ​ |  | (6,458) | ​ |  | (235)
Total Long-term debt | ​ | $ | 154,209 | ​ | $ | 18,826
​ Cash interest payments of $1,267 and $1,039 were made in 2021 and 2020, respectively. The following table summarizes the combined aggregate amount of maturities over the next five fiscal years, excluding the FIB credit facility debt that was repaid in November 2021 as described in Note 16: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2022 |  | 2023 |  | 2024 |  | 2025 |  | 2026 |  | Thereafter |  | Total
Long-term debt(a) |  | $ | 550 |  | $ | 363 |  | $ | 412 |  | $ | 869 |  | $ | 270 |  | $ | 131,673 | ​ | $ | 134,137
(a) excludes indebtedness to FIB repaid in November 2021. Refer to Note 16

X
- References No definition available. + Details
Name: | us-gaap_DebtDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
Name: | us-gaap_DebtDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration