Some News on Concordia - Thoughts? Concordia Creditors Are Said to Double Proposed Rights Offering
2018-02-02 17:53:15.181 GMT
By Allison McNeely
(Bloomberg) -- Concordia International Corp.’s creditors
are considering putting up more equity in the restructured drug
manufacturer as talks continue with about a week to go before
they have to report back to a Canadian judge.
The company could see $500 million to $600 million of new
money through an equity rights offering, which is at least
double the amount previously envisioned, according to people
with knowledge of the matter. Creditors including GSO Capital
Partners LP are still negotiating about who gets to participate
and what the use of proceeds would be, the people said. They
asked not to be identified discussing confidential talks.
Discussions have been focused on putting about two-thirds
to 80 percent of the new money toward paying the secured debt,
as well as a new senior bank loan that could charge the London
interbank offered rate plus 500 basis points, one of the people
said. Creditors who participate in the rights offering could end
up with about 90 percent of the equity, the person said. The
talks are continuing and the final terms could change.
Representatives for Concordia, based in Oakville, Ontario,
and at GSO, the credit arm of New York-based Blackstone Group
LP, declined to comment. Advisers for the various creditors
declined to comment or didn’t respond to messages.
Cutting Debt
Concordia has been in negotiations since October to cut $2
billion of debt from its balance sheet under the Canada Business
Corporations Act, which requires consent from all security
holders as well as court approval. The process is typically
faster and cheaper than restructuring with the supervision of a
court-appointed monitor under the Companies’ Creditors
Arrangement Act, the closest Canadian equivalent to a Chapter 11
restructuring.
Concordia has been under court protection from its
creditors that prevents them from pursuing other remedies to get
their money back while the restructuring plan is being
negotiated. The creditors include a group of investors holding
only secured debt and a second group owning much of its junior
debt plus some secured notes.
Advisers for the company and its creditors met Jan. 16 with
a Canadian judge who extended court protection until the end of
the first week of February. All parties are still at the table
and aiming to reach agreement, according to one of the people.
The company’s $3.7 billion debt load ballooned during a
growth-by-acquisition binge, increasing by more than 10-fold in
2015. Its North American drug portfolio includes Donnatal, for
irritable bowel syndrome, epileptic seizure drug Zonegran, and
Nilandron, which treats prostate cancer. Concordia hasn’t posted
an annual profit since 2014.
Peter Grauer, chairman of Bloomberg LP, parent of Bloomberg
News, is a non-executive director at Blackstone.
To contact the reporter on this story:
Allison McNeely in Toronto at amcneely@bloomberg.net
To contact the editors responsible for this story:
Rick Green at rgreen18@bloomberg.net;
Nikolaj Gammeltoft at ngammeltoft@bloomberg....