PENDING BUSINESS COMBINATION	9 Months Ended
Sep. 30, 2021
PENDING BUSINESS COMBINATION
PENDING BUSINESS COMBINATION	3. PENDING BUSINESS COMBINATION On March 8, 2021, we entered into a definitive agreement to acquire Novitium Pharma LLC (“Novitium”), a privately held New Jersey-based pharmaceutical company with development, manufacturing, and commercial capabilities (the “Acquisition”). The closing of the Acquisition will occur (a) within five business days after all of the conditions to the closing set forth in the merger agreement are satisfied or waived or (b) at such other time, date and place as may be agreed by us and Novitium, subject to the completion of a minimum period. The closing is subject to the satisfaction of customary closing conditions and necessary regulatory approvals. Consideration will consist of a combination of (i) an estimated cash amount of $89.5 million, subject to various adjustments and expected to be financed by a $25.0 million private placement of preferred stock (the “PIPE Investment”) and by new debt financing, both described below, (ii) an aggregate of 2,466,667 shares of ANI common stock, and (iii) up to $46.5 million in contingent future earn-out payments. We will finance the transaction with a new $340.0 million Senior Secured Credit Facility (the “New Facility”), consisting of a $300.0 million term loan and a $40.0 million revolving credit facility, the issuance of 2,466,667 shares of ANI common stock (approximately $74.0 million in value based on a $30.00 stock price) (the “Stock Consideration”), and a $25.0 million PIPE Investment by Ampersand 2020 Limited Partnership (“Ampersand”), an affiliate of Ampersand Capital Partners of which ANI’s Chairman of the Board is an operating partner and as such Ampersand is a related party. At closing, we intend to use the proceeds from the New Facility to fund a portion of the Acquisition and repay all of the outstanding debt under the existing senior secured credit facility discussed in Note 4. The New Facility will be secured by substantially all the assets of ANI and its subsidiaries and used for the cash portion of the acquisition and to refinance ANI’s existing senior credit facilities. The term loan portion of the New Facility, which was successfully syndicated on May 24, 2021, represents fully committed capital and, as such, carries a customary ticking fee that commences 45 days and 90 days post allocation. During the three and nine months ended September 30, 2021, we incurred $2.4 million in expense related to the ticking fee, all of which was recognized as other expense, net, on the unaudited interim condensed consolidated statement of operations. Amounts drawn on the $300.0 million term loan will bear an interest rate equal to 1-month LIBOR rate plus an applicable margin of 6.00% per annum, or an alternative base rate plus an applicable base rate margin of 5.00% per annum. Amounts drawn on the $40.0 million revolving credit facility will bear an interest rate equal to 1-month LIBOR rate plus an applicable margin of 4.75% per annum, or an alternative base rate plus an applicable base rate margin of 3.75% per annum. On the revolving credit facility, we will incur a commitment fee on any unused portion at a rate of 0.50% per annum. As discussed in Note 5, we currently have an interest rate swap to manage our exposure to changes in LIBOR-based interest rates underlying total borrowings under our Term Loan and DDTL. We intend to retain an interest rate swap with similar structure and terms in order to manage our exposure to changes in LIBOR-based interest rates underlying a portion of borrowings under the New Facility. Concurrently with the execution of the definitive agreement, on March 8, 2021, we entered into an Equity Commitment and Investment Agreement with Ampersand (the “PIPE Investor”), pursuant to which we agreed to issue and sell to the PIPE Investor, and the PIPE Investor agreed to purchase, 25,000 shares of our Series A Convertible Preferred Stock (the “PIPE Shares”), for a purchase price of $1,000 per share and an aggregate purchase price of $25.0 million PIPE Investment. The issuance of shares of ANI common stock into which PIPE Shares will be convertible and the Stock Consideration for the Acquisition were approved by the ANI stockholders in June 2021. During the three and nine months ended September 30, 2021, we incurred $0.5 million and $5.1 million, respectively, in transaction costs related to this pending Acquisition, all of which were expensed and recognized as selling, general, and administrative expenses on the unaudited interim condensed consolidated statements of operations.

PENDING BUSINESS COMBINATION

9 Months Ended

Sep. 30, 2021

3. PENDING BUSINESS COMBINATION

On March 8, 2021, we entered into a definitive agreement to acquire Novitium Pharma LLC (“Novitium”), a privately held New Jersey-based pharmaceutical company with development, manufacturing, and commercial capabilities (the “Acquisition”). The closing of the Acquisition will occur (a) within five business days after all of the conditions to the closing set forth in the merger agreement are satisfied or waived or (b) at such other time, date and place as may be agreed by us and Novitium, subject to the completion of a minimum period. The closing is subject to the satisfaction of customary closing conditions and necessary regulatory approvals.

Consideration will consist of a combination of (i) an estimated cash amount of $89.5 million, subject to various adjustments and expected to be financed by a $25.0 million private placement of preferred stock (the “PIPE Investment”) and by new debt financing, both described below, (ii) an aggregate of 2,466,667 shares of ANI common stock, and (iii) up to $46.5 million in contingent future earn-out payments.

We will finance the transaction with a new $340.0 million Senior Secured Credit Facility (the “New Facility”), consisting of a $300.0 million term loan and a $40.0 million revolving credit facility, the issuance of 2,466,667 shares of ANI common stock (approximately $74.0 million in value based on a $30.00 stock price) (the “Stock Consideration”), and a $25.0 million PIPE Investment by Ampersand 2020 Limited Partnership (“Ampersand”), an affiliate of Ampersand Capital Partners of which ANI’s Chairman of the Board is an operating partner and as such Ampersand is a related party. At closing, we intend to use the proceeds from the New Facility to fund a portion of the Acquisition and repay all of the outstanding debt under the existing senior secured credit facility discussed in Note 4.

The New Facility will be secured by substantially all the assets of ANI and its subsidiaries and used for the cash portion of the acquisition and to refinance ANI’s existing senior credit facilities. The term loan portion of the New Facility, which was successfully syndicated on May 24, 2021, represents fully committed capital and, as such, carries a customary ticking fee that commences 45 days and 90 days post allocation. During the three and nine months ended September 30, 2021, we incurred $2.4 million in expense related to the ticking fee, all of which was recognized as other expense, net, on the unaudited interim condensed consolidated statement of operations. Amounts drawn on the

$300.0 million term loan will bear an interest rate equal to 1-month LIBOR rate plus an applicable margin of 6.00% per annum, or an alternative base rate plus an applicable base rate margin of 5.00% per annum. Amounts drawn on the $40.0 million revolving credit facility will bear an interest rate equal to 1-month LIBOR rate plus an applicable margin of 4.75% per annum, or an alternative base rate plus an applicable base rate margin of 3.75% per annum. On the revolving credit facility, we will incur a commitment fee on any unused portion at a rate of 0.50% per annum.

As discussed in Note 5, we currently have an interest rate swap to manage our exposure to changes in LIBOR-based interest rates underlying total borrowings under our Term Loan and DDTL. We intend to retain an interest rate swap with similar structure and terms in order to manage our exposure to changes in LIBOR-based interest rates underlying a portion of borrowings under the New Facility.

Concurrently with the execution of the definitive agreement, on March 8, 2021, we entered into an Equity Commitment and Investment Agreement with Ampersand (the “PIPE Investor”), pursuant to which we agreed to issue and sell to the PIPE Investor, and the PIPE Investor agreed to purchase, 25,000 shares of our Series A Convertible Preferred Stock (the “PIPE Shares”), for a purchase price of $1,000 per share and an aggregate purchase price of $25.0 million PIPE Investment. The issuance of shares of ANI common stock into which PIPE Shares will be convertible and the Stock Consideration for the Acquisition were approved by the ANI stockholders in June 2021.

During the three and nine months ended September 30, 2021, we incurred $0.5 million and $5.1 million, respectively, in transaction costs related to this pending Acquisition, all of which were expensed and recognized as selling, general, and administrative expenses on the unaudited interim condensed consolidated statements of operations.