Inotiv, Inc. Announces Proposed Convertible Senior Notes Offering

Rhea-AI Summary

Inotiv, Inc. (NASDAQ: NOTV) has announced a private offering of $110 million in convertible senior notes due 2027, aiming to fund its acquisition of Envigo RMS Holding Corp. The notes are guaranteed by BAS Evansville, Inc. and come with an option to purchase an additional $16.5 million. Proceeds will also cover fees related to the acquisition. The notes can be redeemed starting from October 2024, depending on market conditions. Until shareholder approval is secured, Inotiv will settle conversions entirely in cash.

Positive

• Potential funding for the Envigo acquisition, which could enhance Inotiv's service offerings.
• The offering of convertible senior notes provides a means to raise significant capital.

Negative

• Dependence on the successful completion of the Envigo acquisition, which introduces execution risk.
• Notes redeemable if the acquisition does not close by June 30, 2022, potentially impacting investor confidence.

WEST LAFAYETTE, Ind., Sept. 21, 2021 (GLOBE NEWSWIRE) -- Inotiv, Inc. (NASDAQ: NOTV) (the “Company”, “We”, “Our” or “Inotiv”), a leading contract research organization specializing in nonclinical and analytical drug discovery and development services, today announced its intention to offer, subject to market and other conditions, $110,000,000 aggregate principal amount of convertible senior notes due 2027 (the “notes”) in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). The notes will be fully and unconditionally guaranteed, on a senior, unsecured basis, by BAS Evansville, Inc., a wholly owned subsidiary of Inotiv (the “guarantor”). Inotiv also expects to grant the initial purchaser of the notes an option to purchase, for settlement within a period of 13 days from, and including, the date the notes are first issued, up to an additional $16,500,000 principal amount of notes.

Inotiv intends to use the net proceeds from the offering of notes, together with borrowings under a new senior secured term loan facility, to fund the cash purchase price of Inotiv’s previously announced acquisition of Envigo RMS Holding Corp. (the “Envigo acquisition”), if it is consummated, and to pay related fees and expenses.

The notes will be senior, unsecured obligations of Inotiv, will accrue interest payable semi-annually in arrears and will mature on October 15, 2027, unless earlier repurchased, redeemed or converted. Noteholders will have the right to convert their notes in certain circumstances and during specified periods. Inotiv will settle conversions by paying or delivering, as applicable, cash, its common shares or a combination of cash and its common shares, at Inotiv’s election. However, until Inotiv obtains the shareholder approval required by certain listing standards of The NASDAQ Capital Market, if at all, and Inotiv has increased the number of its authorized common shares and reserved a sufficient number of common shares solely for issuance upon conversion of the notes, Inotiv will settle all conversions entirely in cash.

The notes will be redeemable, in whole and not in part, for cash at Inotiv’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 exceeds 130% of the conversion price for a specified period of time. The redemption price will be 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, if the Envigo acquisition has not closed as of the close of business on June 30, 2022, or if, before such time, the related Envigo merger agreement is terminated in accordance with its terms or Inotiv’s board of directors determines, in its good faith judgment, that the Envigo acquisition will not occur, then the notes will be redeemable, in whole and not in part, at Inotiv’s option, on a redemption date occurring on or before October 3, 2022, at a cash redemption price equal to 101% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest, plus a make-whole premium.

If a “fundamental change” (as defined in the indenture for the notes) occurs, then noteholders may require Inotiv to repurchase their notes for cash. The repurchase price will be equal to the principal amount of the notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the applicable repurchase date.

The interest rate, initial conversion rate and other terms of the notes will be determined at the pricing of the offering.

The offer and sale of the notes, the guarantee and any common shares issuable upon conversion of the notes have not been, and will not be, registered under the Securities Act or any other securities laws, and the notes and any such shares cannot be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and any other applicable securities laws. This press release does not constitute an offer to sell, or the solicitation of an offer to buy, the notes or any common shares issuable upon conversion of the notes, nor will there be any sale of the notes or any such shares, in any state or other jurisdiction in which such offer, sale or solicitation would be unlawful.

About the Company

Inotiv, Inc. is a leading contract research organization specializing in nonclinical and analytical drug discovery and development services. The Company focuses on developing innovative services supporting its clients’ discovery and development objectives for improved decision-making and accelerated goal attainment. The Company’s products focus on increasing efficiency, improving data, and reducing the cost of taking new drugs to market.

Forward-Looking Statements

This press release includes forward-looking statements, including statements regarding the anticipated terms of the notes being offered, the completion, timing and size of the proposed offering, the completion of the pending Envigo acquisition and the intended use of the proceeds. Forward-looking statements represent Inotiv’s current expectations regarding future events and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those implied by the forward-looking statements. Among those risks and uncertainties are market conditions, including market interest rates, the trading price and volatility of Inotiv’s common shares and risks relating to Inotiv’s business, including those described in periodic reports that Inotiv files from time to time with the SEC. Inotiv may not consummate the proposed offering described in this press release and, if the proposed offering is consummated, cannot provide any assurances regarding the final terms of the offering or the notes or its ability to effectively apply the net proceeds as described above. The forward-looking statements included in this press release speak only as of the date of this press release, and Inotiv does not undertake to update the statements included in this press release for subsequent developments, except as may be required by law.

Company Contact		Investor Relations
Inotiv, Inc. Beth A. Taylor, Chief Financial Officer (765) 497-8381  btaylor@inotivco.com		The Equity Group Inc. Kalle Ahl, CFA (212) 836-9614 kahl@equityny.com
		Devin Sullivan (212) 836-9608 dsullivan@equityny.com

FAQ

What is the purpose of Inotiv's $110 million convertible senior notes offering?

The offering aims to fund the acquisition of Envigo RMS Holding Corp. and cover related fees.

When will the Inotiv convertible senior notes mature?

The notes will mature on October 15, 2027.

What happens if the Envigo acquisition does not close by June 30, 2022?

If the acquisition does not close, Inotiv has the option to redeem the notes at a cash price of 101% of the principal.

Who guarantees the convertible senior notes offered by Inotiv?

The notes are fully and unconditionally guaranteed by BAS Evansville, Inc., a wholly owned subsidiary of Inotiv.

What is the initial offering amount for Inotiv's convertible senior notes?

The initial offering amount is $110 million, with an option for an additional $16.5 million.