Lannett announces restructuring
Lannett, together with some of its subsidiaries, has entered into a restructuring support agreement with holders of more than 80% of its 7.750% senior secured notes due 2026 and 100% of the lenders party to the company's second lien credit and guaranty agreement.
The financial restructuring transaction contemplated by the RSA will reduce the company's outstanding secured indebtedness by approximately $511 million, significantly strengthening the company's balance sheet and enhancing financial flexibility going forward. In connection with this debt reduction, the amount of the company's interest expense will substantially decrease, ensuring capacity to invest in the business plan, the company said.
Following completion of the transaction, the Secured Lenders will own the equity of the company and the company's existing stock will be cancelled. The company is working to complete this financial restructuring transaction by June 18, 2023, and the company continues to anticipate near-term product launches and significant progress on more specialized technologies and capabilities supporting new product development.
[Read more: Lannett sells discontinued generics, inks private label deal for others]
"This agreement will allow us to focus on strategically positioning the company as a reliable partner and manufacturer, producing safe, effective, life-enhancing generic, affordable pharmaceutical products for our valued patients and customers," said Tim Crew, CEO of Lannett. "We are pleased to have reached this important milestone in cooperation with our noteholders and lenders. We thus see this cooperation as a vote of confidence in our future and our direction as a company."
Lannett will continue to operate in the normal course during the restructuring process. The company continues to have sufficient liquidity to meet its financial obligations to vendors, customers, partners, suppliers and employees, and expects to continue making payments to these parties without interruption in the ordinary course of business. Additionally, the transaction is expected to strengthen the company's financial position by reducing interest costs, Lannett said.
Crew is expected to remain with the new company and join its board of directors.
[Read more: Lannett to sell liquid drug manufacturing plant, other assets for $10.5M]
To implement the financial restructuring contemplated by the RSA, the company expects to file voluntary petitions for reorganization pursuant to Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware, after receiving sufficient votes to support its prepackaged plan of reorganization that effectuates the terms of the RSA. Pursuant to the RSA, the company will begin to solicit votes on its plan no later than May 2, 2023, and complete solicitation no later than May 16, 2023. Currently, holders of more than 80% of its Senior Secured Notes and 100% of its Second Lien Term Lenders have signed up to the RSA and committed to vote in favor of the Plan. As a result, subject to Bankruptcy Court approval of the plan and the satisfaction of certain conditions to effectiveness of the Plan and related transactions, Lannett expects to emerge from bankruptcy within 45 days after the Chapter 11 Filing.