Charles River Laboratories International, Inc. (NYSE: CRL) announced today that it has implemented an accelerated stock repurchase (ASR) program to repurchase $300 million of common stock, as part of its previously announced authorization from its Board of Directors to repurchase up to $500 million of common stock. The new ASR program will enable the Company to facilitate, on a more timely and cost efficient basis, the repurchase of a substantial number of its shares pursuant to that stock repurchase authorization.
Under the ASR program entered into with Morgan Stanley & Co. Incorporated, the Company will receive an initial delivery of 6.0 million shares. The actual number of shares that Charles River repurchases under the ASR program will be determined based on a discount to the daily volume-weighted average price (VWAP) of its common stock over the course of a calculation period, which may extend approximately six months or conclude earlier at Morgan Stanley's option. The Company intends to fund the repurchases through cash on hand and available liquidity, including its $750 million credit facility.
$750 Million Credit Agreement
On August 26, 2010, Charles River amended and restated its existing credit agreement to provide for up to $750 million in financing with certain financial institutions. This is the third amendment and restatement to the Company's previous $660 million credit agreement. The Company's existing $50 million credit agreement has been retired. The existing credit agreements were to mature on July 31, 2011, and had a total of $127.5 million outstanding as of June 26, 2010.
The third amended and restated credit agreement consists of a $400 million U.S. term loan facility and a $350 million U.S. revolving credit facility. A portion of the term loan facility is available in euros to a Netherlands-based subsidiary of the Company. The term loan facility matures in 20 quarterly installments, while the revolving facility matures on August 26, 2015 and requires no scheduled payment before that date. The interest rate applicable to the term loan and revolving facilities is equal to either the base rate (which is the higher of (1) the prime rate, (2) the federal funds rate plus 0.50%, or (3) the one-month adjusted LIBOR rate) or the adjusted LIBOR rate, plus an interest rate margin based upon the Company's leverage ratio. Based upon the Company's current leverage ratio including funds used for the ASR program, the interest rate margin is expected to be 2.50% for the term loan and drawn amounts on the revolving loan, and 0.50% for undrawn amounts on the revolving loan.
The Company intends to use the funds available under the $750 million credit agreement for general corporate purposes, including debt repayment and stock repurchases.