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Termination of a Material Definitive Agreement
Item 1.02 Termination of a Material Definitive Agreement
On June 30, 2008, XLNT Veterinary Care, Inc. ("XLNT"), a
wholly-owned subsidiary of Pet DRx Corporation (the
"Registrant"), elected to prepay its $12,000,000 loan pursuant
to the Credit Agreement between XLNT and the subsidiaries of
XLNT (collectively with XLNT, the "Borrowers") and Fifth Street
Mezzanine Partners, II, L.P. ("Fifth Street"), dated March 29,
2007, as amended ("Credit Agreement"). Specifically, XLNT paid
off all outstanding principal, interest and fees under the
Credit Agreement, in a total amount of $12,511,854.97. A
prepayment fee of $242,429.16 was incurred as a result of this
termination and is included in the total amount.
The Credit Agreement provided for a $12,000,000 term loan, with
interest payable monthly at a rate of 15% per annum, and the
principal due in full on March 8, 2010. The Credit Agreement was
secured by the inventory, chattel paper, accounts, equipment and
general intangibles of the Borrowers. The Registrant guaranteed
all obligations and liabilities of the Borrowers under the
Credit Agreement pursuant to a Guaranty dated February 19, 2008.
The Registrant also entered into a Security Agreement with Fifth
Street dated February 19, 2008, whereby the Registrant and two
additional subsidiaries of XLNT granted Fifth Street a security
interest in all of their assets.
The Registrant's decision to pay off the loan in full is based
on its belief that when additional capital is required other
forms of capital may be available to it on more favorable terms
than those offered under the Credit Agreement. The Registrant
believes that Fifth Street has been an excellent financial
partner. For that reason, the Registrant may consider
alternative financing arrangements with Fifth Street in the
future.
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