Form 8-K VARIAN MEDICAL SYSTEMS For: Jul 15

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

  

Date of report (Date of earliest event reported)

July 15, 2015

 

VARIAN MEDICAL SYSTEMS, INC.

(Exact Name of Registrant as Specified in its Charter)

  

Delaware	1-7598	94-2359345
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer  Identification No.)

 

 

3100 Hansen Way, Palo Alto, CA	94304-1030
(Address of Principal Executive Offices)	(Zip Code)

 

Registrant's telephone number, including area code

(650) 493-4000

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 1.01.

Entry into a Material Definitive Agreement.

 

On July 15, 2015, Varian Medical Systems, Inc. (“Varian”), through its subsidiary Varian Medical Systems International AG (“Varian International”), entered into two loan agreements with MM Proton I, LLC, a Delaware limited liability company (“MMI”), as borrower, JPMorgan Chase Bank, N.A. (“JPM”), Varian International and an affiliate of The Goldman Sachs Group, Inc. (“GS”), as lenders, and JPM, as collateral agent and administrative agent. The two loan agreements, described below, were entered into in connection with a purchase agreement with New York Proton Management, LLC (“NYPM”) and MMI, under which Varian agreed to sell to NYPM a proton system and related equipment to equip the New York Proton Center (the “Center”) in New York, New York, as well as a ten-year operations and maintenance agreement with NYPM to provide operations and maintenance services for the proton equipment.

 

The two loan agreements, which represent material definitive agreements of Varian for purposes of Item 1.01, are: (1) a Loan and Security Agreement (Building Loan) dated July 15, 2015 and (2) a Loan and Security Agreement (Project Loan) dated July 15, 2015, both among MMI, as borrower, JPM, Varian International and GS, as lenders, (the two loan agreements are hereinafter referred to collectively as the “Loan Agreements”). The Loan Agreements provide for a maximum aggregate loan to MMI in the principal amount of $242,650,000, including (a) $145,950,000 in “Senior First Lien Loans” with a six-year term, funded equally by JPM and Varian International, (b) $78,200,000 in a six-and-a-half-year term “Senior Second Lien Loan” funded by GS, and (c) $18,500,000 in a six-and-a-half-year term “Subordinate Loan” funded by Varian International. Varian International’s maximum loan commitment is $91,475,000, comprised of $72,975,000 under the Senior First Lien Loan and $18,500,000 under the Subordinate Loan.

 

The outstanding principal on the Senior First Lien Loan will bear interest at a per annum rate of 9%. The outstanding principal on the Subordinate Loan will bear interest at a per annum rate of 13% prior to the date of substantial completion of the Center and 13.5% from and after the date of substantial completion of the Center. Interest only payments are due on the Senior First Lien Loan monthly in arrears. Interest on the Subordinate Loan is compounded quarterly and added to the principal amount of the Subordinate Loan until its maturity date, when all principal and accrued interest is due. The initial disbursement of the Subordinate Loan, which occurred on July 15, 2015, was $15,500,000, and the balance is expected to fund in fiscal year 2015. The Senior First Lien Loan and Senior Second Lien Loan will be funded through draws over the next four years.

 

 

The Loan Agreements provide that advances will be made under the Loans to pay the costs of construction of the Center and to pay interest on the Senior First Lien Loans and the Senior Second Lien Loans as and when interest is due. Each Loan Agreement generally requires the satisfaction of customary conditions before advances are made. Each Loan Agreement also includes customary affirmative and negative covenants. The Loans are secured by substantially all assets of MMI, including the proton therapy system (such that Varian’s rights as equipment vendor in respect of the purchase price are subordinated).

 

Item 8.01.

Other Events.

 

Varian has issued a press release dated July 21, 2015 announcing the entry into agreements to equip and service the proton system and related equipment at the Center in New York and the entry into the loan agreements, each as described in Item 1.01. A copy of the press release is attached as Exhibit 99.1 and incorporated herein by reference.

  

Item 9.01.

Financial Statements and Exhibits.

 

(d)

Exhibits.

 

99.1 Press Release dated July 21, 2015 entitled “Varian Medical Systems to Equip New York Proton Consortium with ProBeam System.”

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	Varian Medical Systems, Inc.
	By:	/s/ John W. Kuo
	Name:	John W. Kuo
	Title:	Senior Vice President, General Counsel and Corporate Secretary

 

Dated: July 21, 2015

 

 

EXHIBIT INDEX

 

Number		Exhibit
99.1		Press Release dated July 21, 2015 entitled “Varian Medical Systems to Equip New York Proton Consortium with ProBeam System.”

  

 

Exhibit 99.1

 

 

FOR INFORMATION CONTACT:

Elisha Finney (650) 424-6803

[email protected]

 

Spencer Sias (650) 424-5782

[email protected]

 

For Immediate Release:

 

 

 

Varian Medical Systems to Equip New York Proton Consortium with ProBeam System

 

NEW YORK, NY, July 21, 2015 -- Varian Medical Systems (NYSE: VAR) today announced that it has entered into an agreement with New York Proton Management LLC, a consortium of leading New York healthcare institutions including Memorial Sloan Kettering Cancer Center, Mount Sinai Health System, Montefiore Health System, and ProHEALTH Medical Management, LLC formed to operate The New York Proton Center, the first proton facility in New York State. Varian will provide the center, which will have four treatment rooms and a research room, with its ProBeam™ system, as well as 10 years of service for approximately $115 million. The center, which will be located in Manhattan, is expected to open for treatment in the first half of 2018.

 

Varian expects to book the equipment portion of the order in the fourth quarter of this fiscal year with the remainder of the order to be booked in accordance with the company's policies over the term of the agreement.

 

Under an agreement with MM Proton I, LLC, the project developer, Varian’s international subsidiary in Switzerland will provide $91.5 million in project financing, including a six-and-half-year $73 million senior first lien loan at 9 percent interest and a six-and-half-year $18.5 million subordinate loan at up to 13.5 percent interest. Other lenders for the $242.7 million in total project loans include JPMorgan Chase Bank, N.A. and an affiliate of The Goldman Sachs Group, Inc. The project facility is managed by Murphy & McManus, a Boston-based developer of healthcare and life science facilities and Norton Travis of NLT Advisors served as project coordinator on behalf of the consortium.

 

“We are excited to be part of an innovative and cooperative initiative by leading cancer clinicians to provide patients in the New York area and around the world with the most advanced proton treatment capabilities,” said Dow Wilson, Varian president and CEO.

 

 

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Varian Medical Systems to Equip New York Proton Consortium with ProBeam System

Page 2

 

 

 

Varian's ProBeam system with Dynamic Peak^™ Scanning is uniquely capable of high-speed intensity modulated proton therapy (IMPT) which is the most precise form of proton therapy available. The Varian installation will include its ARIA® information management system and Eclipse™ treatment planning software.

 

Proton therapy makes it possible to treat certain types of cancer more precisely and with potentially fewer side effects than is possible with conventional radiation therapy. With proton therapy, the risk of damage to healthy tissues and potential side effects is reduced because the beam stops and deposits dose within the tumor site rather than passing all the way through the patient. Proton therapy can be used for many of the most common types of cancer. In pediatric patients the risk of developing a new, radiation-induced cancer later in life may be reduced.

 

Varian's ProBeam technology is being used to treat patients at the Scripps Proton Therapy Center in San Diego, the Rinecker Proton Therapy Center in Munich, and at the Paul Scherrer Institute in Switzerland.  Varian also has contracts for system installations at nine other sites around the world.

 

 

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About Varian Medical Systems
Varian Medical Systems, Inc., of Palo Alto, California, focuses energy on saving lives by equipping the world with advanced technology for fighting cancer and for X-ray imaging. The company is the world's leading manufacturer of medical devices and software for treating cancer and other medical conditions with radiation. The company provides comprehensive solutions for radiotherapy, radiosurgery, proton therapy and brachytherapy. The company supplies informatics software for managing comprehensive cancer clinics, radiotherapy centers and medical oncology practices. Varian is also a premier supplier of X-ray imaging components, including tubes, digital detectors, and image processing software and workstations for use in medical, scientific, and industrial settings, as well as for security and non-destructive testing. Varian Medical Systems employs approximately 6,800 people who are located at manufacturing sites in North America, Europe, and China and approximately 70 sales and support offices around the world. For more information, visit www.varian.com or follow us on Twitter.

 

 

 

 

 

 

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