Sfbc (NASDAQ:SFCC)
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SFBC International, Inc. (NASDAQ:SFCC), a provider of
drug development services to branded pharmaceutical, biotechnology and
generic drug companies, today announced that it has entered into an
agreement with its lenders, which waives all of the Company's defaults
related to covenants and certain other terms under its existing Senior
Secured Credit Facility ("Credit Facility"). SFBC obtained waivers for
these defaults to facilitate the timely filing of the Company's Form
10-K for the period ended December 31, 2005 within the extended
deadline of March 31, 2006.
Following the filing of its Form 10-K, SFBC expects to continue
discussions with its lenders to amend the terms of the Credit Facility
to match the Company's current forecasts, growth strategy and capital
requirements. Until the Credit Facility is amended, SFBC has agreed
with its lenders not to draw down any additional funds from its Credit
Facility. As of December 31, 2005 and March 29, 2006, SFBC had $17
million drawn upon this $90 million Credit Facility. As of March 21,
2006, SFBC had approximately $44 million in cash, cash equivalents and
marketable securities.
Jeffrey P. McMullen, chief executive officer of SFBC
International, stated, "Based on our current business outlook, we
anticipate that we will generate significant cash flow from operations
in 2006 and that we have adequate liquidity to fund our working
capital requirements while we amend the Credit Facility. With our cash
position and outlook for positive cash flow from operations in 2006,
we determined the best course of action was to obtain waivers from our
lenders, allowing additional time to negotiate Credit Facility
covenants and terms, which more appropriately match our current
business objectives. We intend to continue taking appropriate actions
to preserve and enhance long-term shareholder value and maintain
flexibility."
The covenant defaults and the waiver of the covenant defaults for
the Credit Facility do not have an effect on the Company's agreement
with holders of its 2.25% Convertible Senior Notes, due 2024.
About SFBC International, Inc.
SFBC International, Inc. is an international drug development
services company offering a comprehensive range of clinical
development, clinical and bioanalytical laboratory, and consulting
services to the branded pharmaceutical, biotechnology and generic drug
industries. SFBC has more than 35 offices, facilities and laboratories
with approximately 2,500 employees strategically located throughout
the world. For more information, visit SFBC's website at
http://www.sfbci.com.
Forward-Looking Statements
The statements made in this press release relating to amending the
Credit Facility and 2006 cash flow are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of
1995 (the "Act"). Additionally, words such as "seek," "intend,"
"believe," "plan," "estimate," "expect," "anticipate" and other
similar expressions are forward-looking statements within the meaning
of the Act. Some or all of the results anticipated by these
forward-looking statements may not occur. Factors that could cause or
contribute to such differences include, but are not limited to,
whether adverse publicity relating to SFBC's Miami operations causes
clients to select competitors, not only for early stage branded
clinical trials but also for other aspects of SFBC's business; SFBC's
ability to resolve open issues relating to its Miami property
including remediation costs, whether a building permit will be issued,
whether it can complete its remediation plan on a timely basis and
within reasonable cost parameters, whether SFBC will prevail in the
pending land lease litigation and whether, depending on the outcome of
these issues, it will relocate or close its Miami facility; continued
adverse publicity related to actions of the United States Senate
Finance Committee; developments with respect to the SEC's inquiry;
SFBC's ability to successfully achieve and manage the technical
requirements of specialized clinical trial services, while complying
with applicable rules and regulations; the Miami subsidiary's
continued ability to recruit participants for clinical trials;
regulatory changes; changes affecting the clinical research industry;
a reduction of outsourcing by pharmaceutical and biotechnology
companies; SFBC's ability to compete internationally in attracting
clients in order to develop additional business; cancellation of
contracts; SFBC's ability to retain and recruit new employees; SFBC's
clients' ability to provide the drugs and medical devices used in its
clinical trials; the willingness of SFBC's lenders to agree to
covenant and other changes to the Credit Facility; SFBC's ability to
sell its land in Quebec City, Canada to investors who will finance the
construction of SFBC's new Canadian headquarters for Anapharm Inc. and
lease the completed facility back to SFBC; and the national and
international economic climate as it affects drug development
operations. Further information can be found in SFBC's risk factors
contained in the Form S-3 filed with the SEC in 2005 and other filings
with the Securities and Exchange Commission.