Long-term Debt

9 Months Ended

Sep. 30, 2011

Debt And Capital Leases Disclosures [Abstract]

6. Long-term indebtedness

The components of long-term indebtedness are as follows:

	September 30,			December 31,
(in thousands)	2011			2010
Construction loan dated July 2011; one month LIBOR plus 3.0 %, due July 2017	$	21,298		$	-
Term loan dated December 2009; three month LIBOR plus 3.25%, due December 2014		20,096			21,233
Term loan dated November 2009; three month LIBOR plus 3.25%, repaid in July 2011		-			6,513
Term loan dated November 2009; three month LIBOR plus 3.25%, due November 2014		4,565			4,825
Term loan dated April 2006; three month LIBOR plus 3.0%, repaid in April 2011		-			6,686
Loan dated October 2004; 3.0%, due March 2012		2,500			2,500
Term loan dated October 2004; 3.48%, due October 2013		5,334			5,669
Total long-term indebtedness		53,793			47,426
Less current portion of long-term indebtedness		(4,920	)		(17,187	)
Noncurrent portion of long-term indebtedness	$	48,873		$	30,239

In August 2011, the Company entered into a loan agreement with PNC Bank (“PNC”) to provide the Company with an equipment loan of up to $12.0 million to fund equipment purchases at the Company’s Baltimore, Maryland product development and manufacturing facility. Under the equipment loan agreement, PNC agreed to make advances to the Company of up to $12.0 million through August 2012 based on periodic requests from the Company. The loan is collateralized by the equipment purchased. As of September 30, 2011, the Company has not drawn on this loan.

In July 2011, the Company entered into a loan agreement and related agreements with PNC, under which PNC agreed to provide the Company with a construction loan of up to $30.0 million, primarily to fund the ongoing build-out of the Baltimore facility. A portion of the loan was also used to repay the Company’s loan with HSBC Bank, which the Company used to finance a portion of the purchase price of the facility. Under the Company’s loan agreement with PNC, PNC agreed to make advances to the Company of up to $30.0 million through July 2012. The Company is required to make interest only payments through July 2012. Beginning in July 2012, the Company will be required to make monthly payments of principal and interest based upon a 20-year amortization schedule with a balloon payment for the remaining unpaid principal and interest due in July 2017. Payment of the loan is secured by the Baltimore building along with Emergent BioDefense Operations Lansing LLC accounts receivable under the Company’s BioThrax supply contracts. As of September 30, 2011, the Company has drawn $21.3 million under this loan.

Under the terms of the construction and equipment loans with PNC, the Company is required to maintain certain financial covenants including minimum cash and liquid investments balance of $50.0 million, a leverage ratio of less than 2.0 and a debt coverage ratio of not less than 1.25 to 1.

In October 2004, the Company entered into a Secured Conditional Loan with the Maryland Economic Development Assistance Fund for $2.5 million. In October 2011, the Company amended the agreement to extend the paid in full date to March 2012.

In connection with the 2004 purchase of the building in Frederick, Maryland, the Company entered into a loan agreement for $7.0 million with PNC to finance the remaining portion of the purchase price. The borrowing accrued interest at 6.625% per annum through October 2006. The Company was required to make interest only payments through that date. Beginning in November 2006, the Company began to make monthly payments of $62,000, based upon a 15 year amortization schedule. In November 2009 and thereafter, the annual interest rate was fixed at 4.075%. In October 2011, the Company modified the agreement to extend the maturity date to October 2013, reduce the fixed annual interest rate to 3.48% and increase the monthly payment to $64,000. All unpaid principal and interest is due in full in October 2013. The Company has determined that the modified agreement is not a substantial modification of the original loan agreement.