Item 1.01 Entry into a Material Definitive Agreement.
On June 29, 2012 (the "Closing Date"), Avon Products, Inc. (the "Company") entered into a $500.0 million Term Loan Agreement with Citibank, N.A., as Administrative Agent, Citigroup Global Markets Inc., Santander Investment Securities Inc., Goldman Sachs Bank USA and BBVA Compass, as Joint Lead Arrangers and Joint Bookrunners, and the other lenders party thereto (the "Credit Agreement").
The Credit Agreement provides for a $500.0 million term loan facility, subject to a possible one-time increase, as may be requested by the Company, by up to an aggregate incremental principal amount of $250.0 million in commitments that may be subscribed by existing lenders under the Credit Agreement or new lenders.
The reason this looks like a line to credit to acquire a company is because Avon has plenty of cash on hand for day to day corporate operations.
|Total Cash (mrq):||1.24B|
|Total Cash Per Share (mrq):||2.87|
|Total Debt (mrq):||3.39B|
|Total Debt/Equity (mrq):||205.19|
|Current Ratio (mrq):||1.31|
|Book Value Per Share (mrq):||3.79|
|Cash Flow Statement|
|Operating Cash Flow (TTM):||654.40M|
|Levered Free Cash Flow :||596.35M|
Avon might have interest in Obagi Medical Devices (OMPI), as lately, speculation of a buyout has become stronger based on the poison pill being voted down by shareholders by over a 2 to 1 margin at the recent annual shareholders meeting.
As well, Voce Capital Management, a major shareholder of Obagi publicly revealed its opposition to the poison pill implemented by the Board of Directors of Obagi. Sources continue to say that an $19-$23 "all cash" buyout of the firm may finally be close to being announced.
According to my sources, Voce is no longer taking phone calls in regards to Obagi, and have gone silent about the entire Obagi buyout subject.
Shares of Amarin (AMRN) hit a fresh 52 week this morning of $15.55 a share, trading from a low of $5.99 during the period. The shares have had quite a nice run, and is poised to continue that run, as the company draws closer to an FDA approval decision its prescription fish-oil pill AMR101, on July 26th, 2012, which I believe the FDA will approve.
AMR101 is an investigational ultra-pure omega-3 fatty acid in a capsule, comprising not less than 96% icosapent ethyl (ethyl-EPA) in a capsule. Amarin is developing AMR101 for the potential treatment of patients with very high triglyceride levels and high triglyceride levels, or hypertriglyceridemia. Triglycerides are fats in the blood. Amarin's cardiovascular strategy leverages our extensive knowledge and experience in lipid science and the potential therapeutic benefits of polyunsaturated fatty acids in cardiovascular disease.
The chart also looks very bullish on Amarin, as I remarked in a prior article. In my opinion, we can expect a lot of volatility up to July 26th, with waves of upwards movement in stock price to a level the chart seems to indicate should be around $16 to $18, possibly higher up until July 26th.
Vivus's (VVUS) weight loss drug, Qnexa faces an FDA approval decision on The FDA by July 17, 2012. Shares of the company have gained over 15% in the last month -- but are down this morning to $29.53 $0.40 (1.34%).
Qnexa seems to be more effective than Arena's (ARNA) Belviq, which was gained approval on June 27th. Qnexa might be the more effective drug between the 2, but safety concerns might be more an issue for the drug. I think Qnexa will be approved-barely.
If Qnexa fails to gain approval this time around, I would expect the Arena stock to take off very hard, possibly trading up to as high as $20 a share. A rejection of Qnexa would mean Arena would have the only FDA approved weight loss drug, allowing the company to effectively corner the market. It seems to me the Arena shares have Qnexa approval priced in, currently trading this morning in the $10 a share range.
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Disclosure: I am long OMPI.