Instil Bio Inc.
12/23/2024 | Press release | Distributed by Public on 12/23/2024 16:00
Financial Obligation Form 8 K
Item 1.01 Entry into a Material Definitive Agreement.
On December 20, 2024 (the "Closing Date"), Complex Therapeutics LLC ("Borrower"), a wholly-owned subsidiary of Instil Bio, Inc. (the "Company"), entered into a Term Loan Agreement (the "2024 Loan Agreement") and related loan documents with Midland National Life Insurance Company ("Lender"), pursuant to which Lender loaned Borrower a term loan in the principal amount of $85.6 million (the "Loan") to refinance loans secured by the facility in Tarzana, California owned by Borrower (the "Property"). Substantially all of the Loan proceeds were used to repay in full the loans related to the construction and development of the Property made pursuant to the Loan Agreement between Borrower and OP USA Debt Holdings II Limited Partnership (as successor-by-assignment to OPG Hermes Investments (DE) LLC) ("Construction Lender") dated as of June 10, 2022, as amended, and the Mezzanine Loan Agreement between the Company's wholly-owned subsidiary, Complex Therapeutics Mezzanine LLC, and Construction Lender dated as of June 10, 2022, as amended (together, the "Construction Loan Agreements").
The Loan has a term of two years with a one-year extension option. The extension option is subject to certain conditions being met, including: (a) no potential default or event of default, (b) payment of a 0.35% extension fee and the costs and expenses of Lender incurred in connection with the extension, (c) replenishing of all reserve funds as reasonably determined by Lender, and (d) compliance with minimum debt yield and debt service coverage ratio requirements. The Loan bears interest at a fixed rate of 6.35% per annum, with interest-only payments during the term of the Loan and the principal balance due in full at maturity.
The Loan may be prepaid in whole but not in part. If the Loan is prepaid on or prior to the 12-month anniversary of the Closing Date, a prepayment fee is required (other than in connection with a casualty or condemnation event) to make Lender whole for the interest it would have otherwise earned on the Loan during the first 12 months. There is no prepayment fee due if the Loan is prepaid after the 12-month anniversary of the Closing Date.
The Loan is secured by a first mortgage lien on the Property, as assignment of all leases and rents of the Property, and a first priority security interest in all other assets of Borrower. The Loan is generally non-recourse; however, the Company has entered into a Recourse Indemnity Agreement with Lender, which provides that in certain circumstances the Loan will be recourse to the Company to the extent of losses incurred by Lender as a result of the breach of certain customary non-recourse carveouts, and will be full recourse to the Company in the event of (a) a voluntary or collusive bankruptcy or other insolvency proceeding against Borrower or the Company, (b) the substantive consolidation of Borrower, (c) Borrower's incurring of any debt in violation of the Loan Agreement, or (d) a transfer of the Property in violation of the Loan Agreement. The 2024 Loan Agreement and the Recourse Indemnity Agreement include customary representations, covenants, cash sweep provisions and events of default for a financing transaction of this nature, including financial covenants that require the Company to maintain a consolidated net worth of not less than $50 million (exclusive of any interest in the Property) and minimum liquidity of $17.1 million.
The foregoing description of the 2024 Loan Agreement and the Recourse Indemnity Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the 2024 Loan Agreement and the Recourse Indemnity Agreement, copies of which will be filed as exhibits to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024.