Concordia International completes CBCA recapitalization transaction

By Caroline Salls

Pittsburgh, Sept. 7 – Concordia International Corp. completed the recapitalization transaction implemented under its court-approved Canada Business Corporations Act plan of arrangement dated June 26, 2018, according to a news release.

“We believe that the successful closing of the recapitalization transaction will allow us to pursue our strategy and achieve our goals,” chief executive officer Graeme Duncan said in the news release.

“We have an enviable global specialty generics platform and will be seeking both organic and inorganic growth opportunities to leverage this platform to its full potential.

“With a new executive leadership team, a revitalized and strong financial structure and our exceptional global platform, we are looking forward to an exciting future.”

Recapitalization terms

Under the recapitalization transaction, Concordia’s total debt has been reduced by $2.4 billion and its annual cash interest expense has been reduced by about $170 million.

A total of $586.5 million in cash was invested under a private placement in exchange for new limited voting shares of Concordia representing 87.69% of the outstanding limited voting shares of Concordia upon implementation of the transaction.

The company’s secured debt in the amount of $2.1 billion plus interest has been exchanged for cash in an amount equal to any outstanding interest, $605 million and $1.36 billion of new secured debt comprised of $1.06 billion in new senior secured term loans and $300 million in new senior secured notes.

Concordia unsecured debt has been exchanged for new limited voting shares representing 11.96% of the outstanding limited voting shares upon implementation of the transaction, with holders of the company’s existing 7% unsecured notes receiving 2.3987 limited voting shares per $1,000 of principal amount of notes, holders of the company’s existing 9˝% unsecured notes receiving 2.4403 limited voting shares per $1,000 of principal amount of notes and lenders under the unsecured equity bridge loan receiving 2.4625 limited voting shares per $1,000 of principal amount of the unsecured equity bridge loan in exchange for their unsecured debt.

Early consenting unsecured debtholders will receive an additional 1.1977 limited voting shares per $1,000 of principal amount of debt.

Existing common shareholders retained their common shares, subject to a one-for-300 common share consolidation and re-designation as limited voting shares, representing 0.35% of the outstanding limited voting shares of Concordia.

All other equity interests in Concordia, including all options, warrants, rights or similar instruments, have been canceled, and all equity claims, other than existing equity class action claims against Concordia, have been released, provided that any recovery on existing equity class action claims has been limited to recovery from any applicable insurance policies.

Any defaults resulting from the commencement of the CBCA proceedings and third-party change-of-control provisions that may have been triggered by implementation of the recapitalization transaction, have been permanently waived.

Obligations to customers, suppliers and employees were not affected by the recapitalization transaction.

Share consolidation

Concordia said the share consolidation reduced the number of issued and outstanding common shares to 170,946.

Together with the new limited voting shares issued under the transaction, the company now has a total of 48,854,257 limited voting shares outstanding, which will begin trading on the Toronto Stock Exchange on Sept. 11 under the symbols CXR in Canadian dollars and CXR.U in US dollars.

Upon completion of the recapitalization, the company said it expects to have roughly $200 million of unrestricted cash on hand.

As part of the recapitalization transaction, a new management incentive plan is being adopted under which up to 7.5% of the limited voting shares outstanding upon implementation of the plan could be issued.

Concordia said its business will be based on acquiring targeted products and companies predominantly in the company’s core markets in an effort to deliver short-term growth and longer-term value and expanding its product portfolio through pipeline, partnerships and swaps in an effort to deliver mid-term growth and longer-term value.

Board changes

The company said some of its directors resigned effective upon implementation of the plan, and three new directors, in addition to the CEO, have been appointed to the board of directors.

The release indicated that Dough Deeth, Rochelle Fuhrmann, Itzhak Krinsky, Francis Perier Jr. and Patrick Vink are the directors who resigned.

Current director Randy Benson, will become the new chairman. Concordia’s new directors include Barry Fishman, Florian Hager and Robert Manzo.

The company’s legal advisers in connection with the recapitalization transaction were Goodmans LLP and Skadden, Arps, Slate, Meagher & Flom LLP, and its financial adviser was Perella Weinberg Partners LP.

Concordia is an Oakville, Ont., specialty pharmaceutical company focused on European specialty, off-patent medicines.

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