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June 14, 2005
FULL REPAYMENT OF BANK DEBT
Millstone, New Jersey, June 14, 2005 – Life Sciences Research, Inc. (OTCBB:
LSRI) announced today that it paid in full its outstanding bank
indebtedness of ₤22.6 million (approximately $41.3 million) using
the proceeds from the sale-leaseback of its three operating facilities
and cash on hand.
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 ₤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.
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.”
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.
Life Sciences Research, Inc. is a global contract research organization providing product development services to the pharmaceutical, agrochemical and biotechnology industries. LSR brings leading technology and capability to support its clients in non-clinical safety testing of new compounds in early stage development and assessment. The purpose of this work is to identify risks to humans, animals or the environment resulting from the use or manufacture of a wide range of chemicals which are essential components of LSR's clients' products. The Company's services are designed to meet the regulatory requirements of governments around the world. LSR operates research facilities in the United States (the Princeton Research Center, New Jersey) and the United Kingdom (Huntingdon and Eye, England).
announcement contains statements that may be forward-looking as defined
by the Private Securities Litigation Reform Act of 1995. These
statements are based largely on LSR’s expectations and are subject to
a number of risks and uncertainties, certain of which are beyond our
control, as more fully described in the Company’s SEC filings,
including its Form 10-K for the fiscal year ended December 31, 2004, as
filed with the US Securities and Exchange Commission.
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