EATONTOWN, N.J., Aug. 9 /PRNewswire-FirstCall/ -- Osteotech, Inc.
(Nasdaq: OSTE) announced today that it has completed a $16.5 million sale and
leaseback transaction on the land and building located at 201 Industrial Way,
Eatontown, New Jersey, that it utilizes for the processing of allograft
tissue. The Company has used a portion of the proceeds to pay off its
outstanding, long-term debt of approximately $11 million and will use the
remainder of the proceeds for general working capital purposes.
Michael J. Jeffries, Executive Vice President and Chief Financial Officer
stated, "Completion of this transaction provides the Company greater
flexibility in employing its cash resources toward achieving its strategic
goals. We will no longer have covenants from debt that could potentially
restrict the use of funds and, with the incremental funds realized from the
transaction, we will have adequate resources available to fund the near term
growth plans of the Company. Additionally, we will receive an annual cash
flow savings of about $1.0 million since the annual rent payments under the
new lease will be less than the combined interest and principal payments on
the long-term debt being paid off simultaneously with the closing of the sale
of the property."
The Company has entered into a twenty (20) year triple net lease, which
will be accounted for as a capital lease, for the property. The lease
contains two five-year option renewals. Under the terms of the lease, the
Company will make rent payments of $2,326,000 for each of the first seven
years, $1,460,000 for years eight through twelve, and for years thirteen
through twenty, the lesser of fair market value or 105% of the previous five
year rent level, but in no event less than the rent paid in the previous five
year period.
Further, the Company will realize a pre-tax profit of approximately $3.6
million on the transaction, which will be amortized over the initial life of
the lease. The Company also has the right of first negotiation to reacquire
the property at any time if the landlord decides to sell the property to a
third party.
Certain statements made throughout this press release that are not
historical facts contain forward-looking statements (as such are defined in
the Private Securities Litigation Reform Act of 1995) regarding the Company's
future plans, objectives and expected performance. Any such forward-looking
statements are based on assumptions that the Company believes are reasonable,
but are subject to a wide range of risks and uncertainties and, therefore,
there can be no assurance that actual results may not differ materially from
those expressed or implied by such forward-looking statements. Factors that
could cause actual results to differ materially include, but are not limited
to, breach of the Purchase and Sale Agreement or the Lease Agreement,
differences in anticipated and actual product and service introduction dates,
the ultimate success of those products in the marketplace, the continued
acceptance and growth of current products and services, the impact of
competitive products and services, the availability of sufficient quantities
of suitable donated tissue and the success of cost control and margin
improvement efforts. Certain of these factors are detailed from time to time
in the Company's periodic reports (including the Annual Report on Form 10-K
for the year ended December 31, 2004 and the Form 10-Q for the first quarter
of 2005) filed with the Securities and Exchange Commission. All information
in this press release is as of August 9, 2005 and the Company undertakes no
duty to update this information.
Osteotech, Inc., headquartered in Eatontown, New Jersey, is a leading
provider of human bone and bone connective tissue for transplantation and an
innovator in the development and marketing of biomaterial and implant products
for musculoskeletal surgery. For further information regarding Osteotech or
this press release, please go to Osteotech's website homepage at
http://www.osteotech.com and to Osteotech's Financial Information Request Form
website page at http://www.osteotech.com/finrequest.htm.
SOURCE Osteotech, Inc.
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Related links:
http://www.osteotech.com
Company News On-Call:
http://www.prnewswire.com/comp/668050.html
CONTACT:
Michael J. Jeffries, Osteotech, Inc.,
+1-732-542-2800
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