- Concordia is seeking to reduce its existing secured and
unsecured debt obligations by more than $2
billion, while significantly reducing its annual interest
expense (the "Proposed Recapitalization Transaction")
- Canada Business Corporations Act (the "CBCA") is a Canadian
corporate statute allowing Canadian corporations to restructure
certain debt obligations. The CBCA is not a bankruptcy or
insolvency statute
- Company intends to continue operating its business as usual
during the CBCA proceedings while honouring its obligations to
employees, suppliers and customers
OAKVILLE, ON, Oct. 20, 2017 /PRNewswire/ - Concordia
International Corp. ("Concordia" and together with its
subsidiaries, the "Company") (NASDAQ: CXRX) (TSX: CXR), an
international specialty pharmaceutical company focused on becoming
a leader in European specialty, off-patent medicines, today
announced that it has taken a further step in its previously
announced efforts to realign its capital structure by commencing a
court proceeding under the Canada Business Corporations Act
(the "CBCA").
Today's disclosure follows an announcement on October 16, 2017, that the Company decided to use
a 30-day grace period to defer the payment of approximately
$26 million of interest on its
$735 million unsecured notes.
The CBCA is a Canadian corporate statute that, among other
things, allows Canadian corporations to restructure certain debt
obligations. In most cases, a corporation working through a CBCA
process will be able to complete a recapitalization transaction in
a more efficient manner based on time, cost and other key factors.
The CBCA is not a bankruptcy or insolvency statute.
Under the CBCA process, Concordia's management will continue to
lead day-to-day operations and operate its business as usual, while
meeting its commitments to employees, suppliers and customers.
"The decision to use the CBCA process to achieve our financial
goals was a strategic one that we believe will protect our
business, preserve our cash, and give us extra time to negotiate
with lenders to ensure we achieve the best possible transaction for
our Company, employees, suppliers, customers and other business
partners," said Allan Oberman, Chief
Executive Officer of Concordia. "We appreciate the ongoing
cooperation of our lenders throughout this process and remain
optimistic that we can reach a consensual transaction with them
that we believe will allow us to move forward with all of the
pillars of our DELIVER strategy in order to maximize the potential
of Concordia."
Concordia chose to initiate this process to support its Proposed
Recapitalization Transaction that is expected to significantly
reduce its outstanding debt and annual interest costs and position
the business for longer-term growth.
The Proposed Recapitalization Transaction, which Concordia
intends to implement through a corporate plan of arrangement under
the CBCA (the "Plan of Arrangement"), would seek to reduce the
Company's existing secured and unsecured debt obligations by more
than $2 billion. As a result, the
Company's annual interest expense also would be significantly
reduced.
The Proposed Recapitalization Transaction may result in dilution
of the outstanding common shares of the Company (with an associated
impact on the value of such shares). The extent of such dilution,
although unknown at this time, may be sizable. Concordia is
continuing discussions with its lenders and their respective
advisors to finalize the terms of the Proposed Recapitalization
Transaction.
The Company had approximately $340
million of cash on hand as of September 30, 2017, and has sufficient liquidity
in the near term to operate its business and meet its ordinary
course financial commitments, including without limitation, to its
employees, suppliers and customers, while it works to achieve its
financial objectives.
In connection with the actions announced today, the following
payments owed to unsecured lenders will not be paid as scheduled,
and are instead expected to be addressed as part of the Proposed
Recapitalization Transaction: approximately $26 million interest payment due on October 16, 2017 under Concordia's 7.00%
unsecured senior notes, as was previously announced; approximately
$34 million of principal and accrued
interest due on October 20, 2017
under the Company's unsecured, two-year equity bridge facility; and
approximately $2.5 million under
Concordia's unsecured, extended bridge facility due on October 23, 2017. Concordia does intend to
continue to make scheduled, ordinary course interest and
amortization payments under its secured debt instruments, as
applicable.
Concordia has obtained a preliminary interim order from the
Ontario Superior Court of Justice (the "Court") which, among other
things, grants an interim stay of proceedings in favour of
Concordia and certain of its subsidiaries to protect them against
any defaults and related steps or actions that may result from
Concordia's decision to initiate CBCA proceedings and any defaults
under its debt documents.
Concordia intends to host the CBCA Recapitalization documents on
its website in the Investors section.
Completion of the Proposed Recapitalization Transaction will be
subject to, among other things, approval of the Plan of Arrangement
by the applicable security holders of Concordia; other approvals
that may be required by the Court, NASDAQ and/or the Toronto Stock
Exchange; Court approval; and the receipt of all necessary
regulatory approvals. Once approved, the Plan of Arrangement is
binding for all holders of secured debt, unsecured debt and shares
of Concordia.
Further information about the Proposed Recapitalization
Transaction will be made available on SEDAR (www.sedar.com), EDGAR
(www.sec.gov/edgar.shtml) and Concordia's website
(www.concordiarx.com). Additional information and key dates in
connection with the Proposed Recapitalization Transaction,
including with respect to the proceedings under the CBCA, will be
made publicly available by Concordia.
This press release is not an offer of securities for sale in
the United States. Securities may
not be offered or sold in the United
States absent an exemption from registration under the
Securities Act of 1933.
About Concordia
Concordia is an international
specialty pharmaceutical company with a diversified portfolio of
more than 200 patented and off-patent products, and sales in more
than 90 countries. Going forward, the Company is focused on
becoming a leader in European specialty, off-patent medicines.
Concordia operates out of facilities in Oakville, Ontario and, through its
subsidiaries, operates out of facilities in Bridgetown, Barbados; London, England and Mumbai, India.
Notice regarding forward-looking statements and
information:
This news release includes forward-looking
statements within the meaning of the United States Private
Securities Litigation Reform Act of 1995 and forward-looking
information within the meaning of Canadian securities laws,
regarding Concordia and its business, which may include, but are
not limited to, statements with respect to the Company's ability to
operate in the ordinary course, discussions with Concordia's
lenders and their advisors with respect the proposed
recapitalization transaction, a proposed recapitalization
transaction, the completion of a proposed recapitalization
transaction including obtaining any necessary approvals and the
expected timing thereof, reducing the Company's existing debt and
interest expense (including the amounts thereof), positioning the
Company for long-term growth, executing the Company's DELIVER
strategy, the Company's available liquidity to operate its business
and meet its financial commitments (including commitments to
employees, customers, suppliers and business partners), the
benefits of the CBCA process, proceedings under the CBCA including
with respect to CBCA proceedings compared to proceedings under
bankruptcy and insolvency statutes, the ability of the CBCA process
to protect the Company's business, preserve Concordia's cash and/or
give Concordia additional time to negotiate with its lenders,
optimism about the ability to reach a consensual transaction with
the Company's lenders that would enable Concordia to move forward
with all of the pillars of the Company's DELIVER strategy in order
to maximize the potential of Concordia, Concordia's intention to
make scheduled interest and amortization payments, Concordia's
management continuing to lead day-to-day operations, achieving the
best possible recapitalization transaction, reaching a consensual
transaction with holders of the Company's debt, maximizing
Concordia's potential, implementing a Plan of Arrangement, issuing
new equity, the allocation of any new equity and the dilution of
the Company's outstanding common shares, the expected value of the
Company's existing equity following the completion of a
recapitalization transaction, addressing certain payments as part
of a proposed recapitalization transaction, protection for the
Company and its subsidiaries against defaults and any related steps
or actions under CBCA proceedings and the focus on becoming a
leader in European specialty, off-patent medicines. The
forward‐looking events and circumstances discussed in this news
release may not occur by certain dates or at all and could differ
materially as a result of known and unknown risk factors and
uncertainties affecting Concordia, including risks associated with
a proposed recapitalization transaction including the inability to
complete a proposed recapitalization transaction or complete a
proposed recapitalization transaction in a timely or efficient
manner, the inability to reduce the Company's debt and/or interest
payments, the inability to position the Company for long-term
growth, the inability to execute the DELIVER strategy, the
Company's available liquidity being insufficient to operate its
business and meet its financial commitments (including commitments
to employees, customers, suppliers and business partners),
proceedings under the CBCA, Concordia's management no longer
leading day-to-day operations, the inability to achieve the best
possible recapitalization transaction, the inability to reach a
consensual transaction with holders of the Company's debt, the
inability to maximize Concordia's potential, Concordia's failure to
make scheduled interest and amortization payments (which could
result in a loss of the protections afforded by the CBCA process
(including the stay of proceedings thereunder), the inability to
negotiate with Concordia's lenders, the CBCA process not providing
the protection sought by Concordia, the inability of the CBCA
process to preserve Concordia's cash, the inability to implement a
Plan of Arrangement, the risks associated with issuing and
allocating new equity including the possible dilution of the
Company's outstanding common shares, the value of existing equity
following the completion of a recapitalization being limited or
having no value, the inability to address certain payments as part
of a proposed recapitalization, the inability of CBCA proceedings
to protect the Company and its subsidiaries against defaults and
any related steps or actions, Concordia defaulting on its
obligations (including under its debt agreements) which could
result in Concordia having to file for bankruptcy or insolvency,
Concordia being put into an insolvency or bankruptcy proceeding as
a result of not making the payments described herein, the Company's
inability to become a leader in European specialty, off-patent
medicines, Concordia's securities, increased indebtedness and
leverage, Concordia's growth, risks associated with the use of
Concordia's products, the inability to generate cash flows,
revenues and/or stable margins, the inability to repay debt and/or
satisfy future obligations, risks associated with Concordia's
outstanding debt, risks associated with the geographic markets in
which Concordia operates and/or distributes its products, risks
associated with distribution agreements, the pharmaceutical
industry and the regulation thereof, regulatory investigations, the
failure to comply with applicable laws, legislative changes
(including, without limitation, the U.K. Health Service Medical
Supplies (Costs) Act), economic factors, market conditions, risks
associated with growth and competition, the failure to obtain
regulatory approvals, the equity and debt markets generally,
general economic and stock market conditions, risks associated with
fluctuations in exchange rates (including, without limitation,
fluctuations in currencies), political risks (including changes to
political conditions), risks associated with the United Kingdom's exit from the European Union
(including, without limitation, risks associated with legislative
changes, regulatory changes in the pharmaceutical industry, changes
in cross-border tariff and cost structures and the loss of access
to the European Union global trade markets), risks related to
patent infringement actions, the loss of intellectual property
rights, risks and uncertainties detailed from time to time in
Concordia's filings with the Securities and Exchange Commission and
the Canadian Securities Administrators, and many other factors
beyond the control of Concordia. Although Concordia has attempted
to identify important factors that could cause actual actions,
events or results to differ materially from those described in
forward-looking statements and information, there may be other
factors that cause actions, events or results to differ from those
anticipated, estimated or intended. No forward-looking statement or
information can be guaranteed. Except as required by applicable
securities laws, forward-looking statements and information speak
only as of the date on which they are made and Concordia undertakes
no obligation to publicly update or revise any forward-looking
statement or information, whether as a result of new information,
future events, or otherwise.
SOURCE Concordia International Corp.