Concordia International files CBCA case to support recapitalization

By Caroline Salls

Pittsburgh, Oct. 20 – Concordia International Corp. initiated a court proceeding under the Canada Business Corporations Act as the next step in its efforts to realign its capital structure, according to a company news release.

The company said Friday’s announcement follows its Oct. 16 decision to use a 30-day grace period to defer the payment of roughly $26 million of interest on its $735 million of unsecured notes.

Concordia said its management will continue to lead day-to-day operations while meeting 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,” chief executive officer Allan Oberman said in the release.

Concordia said its proposed recapitalization transaction is expected to significantly reduce its debt and annual interest costs and position the business for longer-term growth.

The proposed transaction, which the company said it intends to implement through a corporate plan of arrangement, would reduce secured and unsecured debt by more than $2 billion. Concordia said its annual interest expense also would be significantly reduced.

Concordia said it had about $340 million of cash on hand as of Sept. 30, and it has sufficient liquidity in the near term to operate its business and meet its ordinary course financial commitments.

In connection with the actions announced Friday, the company said some payments owed to unsecured lenders will not be paid as scheduled, and are instead expected to be addressed as part of the recapitalization transaction.

Those payments include the $26 million interest payment due Oct. 16 on Concordia’s 7% unsecured senior notes, $34 million of principal and accrued interest due Oct. 20 on its unsecured two-year equity bridge facility and $2.5 million under its unsecured extended bridge facility due Oct. 23.

Concordia said it will continue to make scheduled, ordinary course interest and amortization payments under its secured debt instruments.

The company said it obtained a preliminary interim order from the Ontario Superior Court of Justice, which grants an interim stay of proceedings to protect the company and some of its subsidiaries against any defaults and related steps or actions that may result from the decision to initiate CBCA proceedings, as well as any defaults under its debt documents.

Completion of the recapitalization transaction will be subject to approval of the plan of arrangement by Concordia’s security holders, other approvals that may be required by the court, Nasdaq and/or the Toronto Stock Exchange, court approval and regulatory approvals.

Oakville, Ont.-based Concordia International makes legacy pharmaceutical acquisitions and develops orphan drugs.

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