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Item 1.01
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Entry into a Material Definitive Agreement
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As previously disclosed, Zealand Pharma A/S, (the “Purchaser”), and Valeritas Holdings, Inc. (the “Company”) and certain of its subsidiaries (together, the “Sellers”) entered into an Asset Purchase Agreement (the “Purchase Agreement”) pursuant to which, subject to the conditions described below, the Purchaser agreed to purchase substantially all of the assets of the Company (such assets, the “Assets,” and such transaction, the “Asset Sale”). The consideration for the Asset Sale provided for in the Purchase Agreement is comprised of (i) $23 million in cash and (ii) the assumption of certain liabilities of the Debtors, all as set forth in the Purchase Agreement. A copy of the Purchase Agreement is filed as Exhibit 10.1 to this Current Report on Form 8-K, and is incorporated by reference herein.
The Company cautions that trading in its securities during the pendency of the Chapter 11 Case (as defined below) is highly speculative and poses substantial risks. Trading prices for the Company’s securities may bear little or no relationship to the actual recovery, if any, by holders of the Company’s securities in the Chapter 11 Case. Based upon the current proceeds available from the Asset sale pursuant to the Purchase Agreement, after payment to the Company’s superpriority lenders, the other secured lenders and the payment of other liabilities, there will not be any proceeds available for distribution to the holders of the Company’s common stock.
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Item 2.03
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Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
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On February 14, 2020, the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) entered an order (the “DIP Order”) granting an interim approval to the Company’s proposed senior secured priming debtor-in-possession financing facility (the “DIP Facility”) by and among the Sellers, as borrower, the Lenders (as defined therein) party thereto, and HB Fund LLC, as the “DIP Lender.”
Under the terms of the DIP Order, the Company will have access to $5.5 million of the proposed $12.0 million DIP Facility. The Company will use the proceeds from the DIP Facility to continue its ordinary business during the Chapter 11 Case, and to provide a bridge for the Company to sell its assets through the bankruptcy. The Bankruptcy Court will consider final approval of the full DIP funding at a future hearing to be held on March 12, 2020.
The foregoing description of the DIP Facility does not purport to be complete and is qualified in its entirety by reference to the final, executed DIP Facility, as approved by the Bankruptcy Court.
Further, on February 12, 2020, in addition to other customary orders for relief, the Bankruptcy Court also issued an interim order approving (i) prepetition wages and compensation for the Company’s employees, and (ii) for the Company to honor and continuing offering benefits programs for its employees.
