Agreement Supported by a Substantial
Majority of Each of its First and Second Lien Debtholders and
Opioid Trust
Financial Restructuring Plan to Significantly
Reduce Debt, Increase Free Cash Flow Generation, Extend Maturity
Runway and Better Position Company for Long-Term Success
Intends to Initiate Voluntary
Prepackaged Chapter 11 Proceedings to Implement Plan
Continuing to Deliver High-Quality Therapies
to Patients and Serve Customers; Vendors and Suppliers to be Paid
in Full in the Ordinary Course
DUBLIN, Aug. 23, 2023 /PRNewswire/ -- Mallinckrodt plc (NYSE American: MNK)
("Mallinckrodt" or the "Company"), a
global specialty pharmaceutical company, today announced it has
entered into a Restructuring Support Agreement ("RSA") with a
substantial majority of each of the Company's first and second lien
debtholders and the Opioid Master Disbursement Trust II (the
"Trust") on the terms of a comprehensive financial restructuring
plan that will reduce the Company's total funded debt by
approximately $1.9 billion, increase
free cash flow generation, extend maturity runway and better
position the business for long-term success. The RSA also provides
for, among other consideration, a final payment of $250 million to the Trust, in addition to the
$450 million previously paid, to
support the Trust's mission to address the U.S. opioid crisis
and fund addiction treatment.
To implement the financial restructuring plan contemplated by
the RSA, the Company intends to initiate voluntary prepackaged
Chapter 11 proceedings in the U.S. Bankruptcy Court for the
District of Delaware in the coming
days. Due to the overwhelming support of its key stakeholders, the
Company expects to complete the contemplated prepackaged Chapter 11
process in the fourth quarter of 2023.
Mallinckrodt is operating normally,
supporting patients with high-quality therapies, serving customers
and working with its business partners, and it fully expects to
continue doing so throughout the contemplated court-supervised
process. Additionally, the Company's Specialty Generics business
will continue to abide by previously agreed upon compliance and
monitoring measures. The Company also fully intends to continue
supporting patient groups and patient advocacy programs, including
through its Patient Advocacy Advisory Board and patient assistance
programs.
"After several months of constructive discussions, we are
pleased to have reached this agreement with our key stakeholders,
which will enable Mallinckrodt to
better align our balance sheet with our current business plan,"
said Siggi Olafsson, President and
Chief Executive Officer of Mallinckrodt. "While we have made important
progress over the past year, the steps we are taking now will
strengthen our ability to navigate the challenges that have
affected our business. As we move forward, we remain focused on
advancing our business priorities and operational initiatives,
including seeking growth opportunities across our portfolio and
executing on our recent and planned product launches. Delivering
therapies that improve outcomes for patients with severe and
critical conditions remains at the center of all that we do."
Mr. Olafsson continued, "We appreciate the constructive
engagement with our creditors in determining the best path forward
for the business and our patients, customers, partners and
employees. We also recognize the important role of the Trust in
helping to address the U.S. opioid crisis and have remained
committed to ensuring that we achieved a meaningful resolution for
the Trust through this process. We also thank our patients,
customers and partners for their continued support, and we are
grateful to our employees for their ongoing hard work and
commitment to the patients we serve. We expect to complete this
process on an expedited basis, well-positioned to continue
delivering high-quality therapies."
Under the terms of the RSA:
- The Company will deleverage by reducing its first lien debt by
approximately $1.2 billion and
eliminating all of its approximately $650
million of second lien debt, while transitioning ownership
of the Company to its creditors.
- The Trust will receive a one-time, final payment of
$250 million prior to a Chapter 11
filing and contingent value rights entitling the Trust to payment
in certain circumstances. This payment – in addition to the
$450 million payment and other assets
the Company contributed to the Trust last year – is intended to
support the Trust's mission to address the U.S. opioid crisis
and fund addiction treatment.
- The Company's Acthar-related settlements will be assumed under
the RSA without modification.
- Vendors and suppliers are expected to be paid in the ordinary
course, including for any pre-petition amounts owed at the time of
the contemplated prepackaged Chapter 11 filing.
- Employees are expected to continue receiving their pay and
benefits without interruption.
- All of the Company's outstanding ordinary shares are expected
to be extinguished when the financial restructuring plan is
consummated at the conclusion of the contemplated Chapter 11
process.
In addition, under the terms of the RSA, Mallinckrodt will maintain its robust compliance
and monitoring standards and continue operating in accordance with
the Specialty Generics operating injunction, existing
Acthar-related settlement conditions and Corporate Integrity
Agreement.
Mallinckrodt has received
commitments for $250 million in new
financing from certain of its creditors in connection with the RSA
and has obtained new borrowing availability from lenders under its
asset-based loans, all of which will be subject to court approval.
Together with cash on hand and cash generated from ongoing
operations, this liquidity is expected to be sufficient to support
the Company's continued operations during the contemplated
court-supervised process.
In connection with the contemplated Chapter 11 filing,
Mallinckrodt also intends to make
certain filings to commence Examinership Proceedings in
Ireland, which are required to
implement certain Irish law aspects of the financial restructuring
plan and allow for emergence.
Additional Information
Additional information is available on Mallinckrodt's restructuring website at
www.MNKrestructuring.com.
Vendors, suppliers and trade partners should direct any
inquiries to the Company at +1-908-238-5650 or
Supplier.Inquiry@mnk.com.
Additional information regarding the RSA can be found in the
Current Report on Form 8-K filed today by the Company with the U.S.
Securities and Exchange Commission.
Latham & Watkins LLP, Wachtell, Lipton, Rosen & Katz,
Arthur Cox LLP, Richards, Layton & Finger, P.A., and Hogan
Lovells US LLP are serving as Mallinckrodt's counsel. Guggenheim Securities, LLC
is serving as investment banker, and AlixPartners, LLP is serving
as restructuring advisor.
About Mallinckrodt
Mallinckrodt is a global business
consisting of multiple wholly owned subsidiaries that develop,
manufacture, market and distribute specialty pharmaceutical
products and therapies. The Company's Specialty Brands reportable
segment's areas of focus include autoimmune and rare diseases in
specialty areas like neurology, rheumatology, hepatology,
nephrology, pulmonology, ophthalmology and oncology; immunotherapy
and neonatal respiratory critical care therapies; analgesics;
cultured skin substitutes and gastrointestinal products. Its
Specialty Generics reportable segment includes specialty generic
drugs and active pharmaceutical ingredients. To learn more about
Mallinckrodt, visit
www.mallinckrodt.com.
Mallinckrodt uses its website as a
channel of distribution of important company information, such as
press releases, investor presentations and other financial
information. It also uses its website to expedite public access to
time-critical information regarding the Company in advance of or in
lieu of distributing a press release or a filing with the U.S.
Securities and Exchange Commission (SEC) disclosing the same
information. Therefore, investors should look to the Investor
Relations page of the website for important and time-critical
information. Visitors to the website can also register to receive
automatic e-mail and other notifications alerting them when new
information is made available on the Investor Relations page of the
website.
CAUTIONARY STATEMENTS RELATED TO FORWARD-LOOKING
STATEMENTS
Statements in this document that are not strictly historical,
including statements regarding future financial condition and
operating results, expected product launches, legal, economic,
business, competitive and/or regulatory factors affecting
Mallinckrodt's businesses, and any
other statements regarding events or developments Mallinckrodt believes or anticipates will or may
occur in the future, may be "forward-looking" statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
and involve a number of risks and uncertainties.
There are a number of important factors that could cause actual
events to differ materially from those suggested or indicated by
such forward-looking statements and you should not place undue
reliance on any such forward-looking statements. These factors
include risks and uncertainties related to, among other things: the
bankruptcy process, the ability of Mallinckrodt and its subsidiaries to obtain
approval from the U.S. Bankruptcy Court for the District of
Delaware (the "Court") with
respect to motions or other requests made to the Court throughout
the course of the contemplated Chapter 11 proceedings and to
negotiate, develop, obtain court approval of, confirm and
consummate the plan of reorganization contemplated by the RSA or
any other plan that may be proposed within the Company's currently
expected timeline or at all, the effects of the contemplated
Chapter 11 proceedings, including increased professional costs, on
the liquidity, results of operations and businesses of Mallinckrodt and its subsidiaries, including the
Company's ability to operate normally, support patients, serve
customers, work with business partners and abide by previously
agreed upon compliance and monitoring measures; the consummation of
the transactions contemplated by the RSA, including the ability of
the parties to negotiate definitive agreements with respect to the
matters covered by the term sheets included in the RSA, the
occurrence of events that may give rise to a right of any of the
parties to terminate the RSA and the ability of the parties thereto
to receive the required approval by the Court and to satisfy the
other conditions of the RSA; Mallinckrodt's ability to comply with the continued
listing criteria of NYSE American LLC and the potential suspension
of trading of Mallinckrodt's ordinary
shares on, or delisting from, NYSE American LLC and the effects of
Chapter 11 on the interests of various constituents; fluctuations
in market price and trading volume of Mallinckrodt's ordinary shares; the ability to
maintain relationships with Mallinckrodt's suppliers, customers, employees and
other third parties as a result of, and following, its 2022
emergence from bankruptcy and any emergence upon completion of the
contemplated Chapter 11 proceedings, as well as perceptions of the
Company's increased performance and credit risks associated with
its constrained liquidity position and capital structure, which
reflects a recently increased risk of additional bankruptcy or
insolvency proceedings; Mallinckrodt's
substantial indebtedness, its ability to generate sufficient cash
to reduce its indebtedness and its potential need and ability to
incur further indebtedness; Mallinckrodt's ability to generate sufficient cash
to service indebtedness even now that the pre-petition indebtedness
has been restructured and in light of the proposed financial
restructuring plan contemplated by the RSA; developing, funding and
executing Mallinckrodt's business plan
and ability to continue as a going concern; Mallinckrodt's capital structure upon completion of
the contemplated Chapter 11 proceedings; the comparability of
Mallinckrodt's post-emergence financial
results to its historical results and the projections filed with
the U.S. Bankruptcy Court for the District of Delaware in the Company's 2020 Chapter 11
proceedings; changes in Mallinckrodt's
business strategy and performance; Mallinckrodt's tax treatment by the Internal
Revenue Service under Section 7874 and Section 382 of the Internal
Revenue Code of 1986, as amended; governmental investigations and
inquiries, regulatory actions and lawsuits, in each case related to
Mallinckrodt or its officers; matters
related to the historical commercialization of opioids, including
compliance with and restrictions under the global settlement to
resolve all opioid-related claims; matters related to Acthar Gel,
including settlement with governmental parties to resolve certain
disputes and compliance with and restrictions under the corporate
integrity agreement; scrutiny from governments, legislative bodies
and enforcement agencies related to sales, marketing and pricing
practices; pricing pressure on certain of Mallinckrodt's products due to legal changes or
changes in insurers' reimbursement practices resulting from recent
increased public scrutiny of healthcare and pharmaceutical costs;
the reimbursement practices of governmental health administration
authorities, private health coverage insurers and other third-party
payers; complex reporting and payment obligations under the
Medicare and Medicaid rebate programs and other governmental
purchasing and rebate programs; cost containment efforts of
customers, purchasing groups, third-party payers and governmental
organizations; changes in or failure to comply with relevant laws
and regulations; Mallinckrodt's and its
partners' ability to successfully develop or commercialize new
products or expand commercial opportunities; Mallinckrodt's ability to navigate price
fluctuations; competition; Mallinckrodt's and its partners' ability to protect
intellectual property rights, including in relation to ongoing
litigation; limited clinical trial data for Acthar Gel; clinical
studies and related regulatory processes; product liability losses
and other litigation liability; material health, safety and
environmental liabilities; business development activities;
attraction and retention of key personnel; the effectiveness of
information technology infrastructure including cybersecurity and
data leakage risks; customer concentration; Mallinckrodt's reliance on certain individual
products that are material to its financial performance;
Mallinckrodt's ability to receive
procurement and production quotas granted by the U.S. Drug
Enforcement Administration; complex manufacturing processes;
reliance on third-party manufacturers and supply chain providers;
conducting business internationally; Mallinckrodt's ability to achieve expected benefits
from prior restructuring activities or those contemplated in the
future; Mallinckrodt's significant
levels of intangible assets and related impairment testing; labor
and employment laws and regulations; natural disasters or other
catastrophic events; restrictions on Mallinckrodt's operations contained in the
agreements governing Mallinckrodt's
indebtedness; Mallinckrodt's variable
rate indebtedness; future changes to U.S. and foreign tax laws or
the impact of disputes with governmental tax authorities; and the
impact of Irish laws.
The "Risk Factors" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" sections of
Mallinckrodt's Annual Report on Form
10-K for the fiscal year ended December 30,
2022 and Quarterly Reports on Form 10-Q for the quarterly
periods ended June 30, 2023 and
March 31, 2023, and other filings
with the SEC, all of which are on file with the SEC and available
on Mallinckrodt's website at
http://www.sec.gov and
http://www.mallinckrodt.com respectively, identify and
describe in more detail the risks and uncertainties to which
Mallinckrodt's businesses are subject.
The forward-looking statements made herein speak only as of the
date hereof and Mallinckrodt does not
assume any obligation to update or revise any forward-looking
statement, whether as a result of new information, future events
and developments or otherwise, except as required by law.
CONTACTS
Investor Relations
Daniel
Speciale
Senior Vice President, Finance and CFO, Specialty Generics
+1-314-654-3638
daniel.speciale@mnk.com
Derek Belz
Vice President, Investor Relations
+1-314-654-3950
derek.belz@mnk.com
Media
Michael Freitag /
Aaron Palash / Aura Reinhard / Catherine Simon
Joele Frank, Wilkinson Brimmer
Katcher
+1-212-355-4449
Government Affairs
Derek
Naten
Vice President, Government Affairs
+1-202-459-4143
derek.naten@mnk.com
Mallinckrodt, the "M" brand mark and
the Mallinckrodt Pharmaceuticals logo are trademarks of a
Mallinckrodt company. Other brands are
trademarks of a Mallinckrodt company or
their respective owners. © 2023.
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