Concordia Healthcare Corp (TSX: CXR) has entered into an agreement with underwriters to raise gross proceeds of up to $368 million through a bought deal financing. The transaction is intended to partially fund the company’s proposed purchase of assets held by Switzerland’s Covis Pharma Holdings SARL. Earlier this month, Concordia, a Canadian healthcare company focused on legacy pharmaceutical products and orphan drugs, agreed to buy the assets from Covis, which is controlled by U.S. private equity firm Cerberus Capital Management and other investors. The acquisition is valued at US$1.2 billion.
Concordia Healthcare Corp. Announces $320 Million Bought Deal Financing of Subscription Receipts
TORONTO, ONTARIO–(Marketwired – March 17, 2015) –
Concordia Healthcare Corp. (“Concordia” or the “Company”) (TSX:CXR)(OTCQX:CHEHF) announced today that it has entered into an agreement with a syndicate of underwriters led by RBC Capital Markets, as sole bookrunner and co-lead manager and including GMP Securities L.P. as co-lead manager (collectively, the “Underwriters”), pursuant to which the Underwriters have agreed to purchase, on a bought deal basis, 3,764,720 subscription receipts (the “Subscription Receipts”) of the Company, at a price of C$85.00 per Subscription Receipt (the “Offering Price”) for aggregate gross proceeds to Concordia of C$320,001,200 (the “Offering”).
The Company has agreed to grant the Underwriters an over-allotment option to purchase up to an additional 564,708 Subscription Receipts at the Offering Price, exercisable in whole or in part, at any time on or prior to the date that is 30 days following the closing of the Offering. If this option is exercised in full, an additional C$48,000,180 will be raised pursuant to the Offering and the aggregate gross proceeds of the Offering will be C$368,001,380.
The net proceeds of the Offering will be used to partially fund (i) the proposed acquisition by the Company of substantially all of the commercial assets of privately held Covis Pharma S.à.r.l and Covis Injectables, S.à.r.l (the “Acquisition”); (ii) the fees and expenses incurred in connection with the Acquisition; and (iii) the repayment and retirement of the Company’s outstanding debt issued pursuant to the terms and provisions of the amended and restated senior secured credit facility with General Electric Capital Corporation, Health Financial Services and a syndicate of lenders dated September 30, 2014.
Each Subscription Receipt will entitle the holder thereof to receive, upon the closing of the Acquisition, without payment of additional consideration or further action, one Concordia common share (“Common Share”) in exchange for each Subscription Receipt.
Concordia will file a short form prospectus qualifying the issuance of the Subscription Receipts and the underlying Common Shares to be issued as per the terms of the Subscription Receipts. The Offering is expected to close on or about April 8, 2015 and is subject to certain conditions including, but not limited to, the receipt of all necessary approvals including the approval of the Toronto Stock Exchange.
The Subscription Receipts will be issued pursuant to a subscription receipt agreement (the “Subscription Receipt Agreement”). Pursuant to the Subscription Receipt Agreement, the proceeds of the Offering, less the costs and expenses of the Underwriters and 50% of the Underwriters’ fee payable in connection therewith, will be held in escrow pending delivery of notice of the closing of the Acquisition. If: (i) the Acquisition closing does not occur prior to 5:00 p.m. (Toronto time) on September 5, 2015; (ii) the asset purchase agreement in respect of the Acquisition is terminated at an earlier time; or (iii) Concordia advises the subscription receipt agent and RBC, or announces to the public, that it will not proceed with the Acquisition, the subscription receipt agent and Concordia will return to holders of Subscription Receipts an amount per Subscription Receipt equal to the Offering Price plus a pro rata share of the interest earned or deemed to be earned on the escrowed funds, net of any applicable withholding taxes.
Concordia is a diverse healthcare company focused on legacy pharmaceutical products and orphan drugs. Concordia’s legacy pharmaceutical division, Concordia Pharmaceuticals Inc., consists of the following products: ADHD-treatment Kapvay® (clonidine extended release tablets), head lice treatment Ulesfia® (benzyl alcohol) Lotion, asthma-related medication Orapred ODT® (prednisolone sodium phosphate orally disintegrating tablets), irritable bowel syndrome treatment Donnatal® (belladonna alkaloids, phenobarbital) and Zonegran® (zonisamide) for treatment of partial seizures in adults with epilepsy. Concordia’s specialty healthcare distribution (SHD) division, Complete Medical Homecare, distributes medical supplies targeting diabetes and related conditions. Concordia’s orphan drugs division, Concordia Laboratories Inc., manufactures PHOTOFRIN®. PHOTOFRIN® is marketed by Pinnacle Biologics, Inc. in the United States.
Concordia operates out of facilities in Oakville, Ontario; Bridgetown, Barbados; Kansas City, Missouri; Chicago, Illinois and Charlottesville, Virginia.
Notice regarding forward-looking statements:
This release includes forward-looking statements regarding Concordia and its business, which may include, but are not limited to, the filing of the preliminary short form prospectus and the timing thereof, the completion of the Offering and the timing thereof, the use of proceeds, and the completion of the Acquisition and the timing thereof. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “is expected”, “expects”, “scheduled”, “intends”, “contemplates”, “anticipates”, “believes”, “proposes” or variations (including negative and grammatical variations) of such words and phrases, or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Such statements are based on the current expectations of Concordia’s management, and are based on assumptions and subject to risks and uncertainties. Although Concordia’s management believes that the assumptions underlying these statements are reasonable, they may prove to be incorrect. The forward-looking events and circumstances discussed in this release may not occur by certain specified dates or at all and could differ materially as a result of known and unknown risk factors and uncertainties affecting Concordia, including risks relating to the use of Concordia’s products to treat certain diseases, the pharmaceutical industry, the failure to obtain regulatory approvals including those related to the Acquisition, risks associated with the acquisition of pharmaceutical products including the Acquisition, economic factors, market conditions, acquisition opportunities, the inability to complete acquisitions including the Acquisition, the equity markets generally, risks associated with growth and competition, general economic and stock market conditions and many other factors beyond the control of Concordia. Although Concordia has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. No forward-looking statement can be guaranteed. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and Concordia undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.
Please visit www.concordiarx.com.
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