Initiates Voluntary Prepackaged Chapter 11
Proceedings with Overwhelming Support of Key Stakeholders,
Including 85%+ of First and Second Lien Debtholders
Continuing to Operate Normally, Serve
Customers and Deliver High-Quality Therapies to Patients
Vendors and Suppliers Expected to be Paid in
Full in the Ordinary Course
DUBLIN, Aug. 28,
2023 /PRNewswire/ -- Mallinckrodt plc (NYSE American: MNK)
("Mallinckrodt" or the "Company"), a
global specialty pharmaceutical company, today announced that it
has taken the next step to implement the comprehensive financial
restructuring plan contemplated by a Restructuring Support
Agreement ("RSA") the Company previously entered into with more
than 85% of each of the Company's first and second lien
debtholders and the Opioid Master Disbursement Trust II (the
"Trust"), as announced on August 23,
2023.
Pursuant to the RSA and with the authorization of the
Company's Board of Directors, Mallinckrodt and certain of its
subsidiaries1 today initiated voluntary
prepackaged Chapter 11 proceedings in the U.S. Bankruptcy Court for
the District of Delaware. With the
overwhelming support of its key stakeholders, the Company expects
to complete the court-supervised process in the fourth quarter of
2023.
Implementing the financial restructuring contemplated by the RSA
will reduce the Company's total funded debt by approximately
$1.9 billion, increase free cash flow
generation, extend maturity runway and better position the business
for long-term success. The RSA also provides for, among other
consideration, a final, one-time payment of $250 million that was made to the Trust on
August 24, 2023. This payment, in
addition to the $450 million the
Company previously paid, is intended to support the Trust's mission
to address the U.S. opioid crisis and fund addiction treatment.
Siggi Olafsson, President and
Chief Executive Officer of Mallinckrodt, said, "We are moving forward with the
anticipated next steps for our financial restructuring plan and
appreciate the significant support of our key stakeholders to reach
this milestone. Implementing this agreement will meaningfully
enhance Mallinckrodt's financial
foundation and better position the business for the future. We
expect to complete this process on an expedited basis and emerge as
a stronger organization that will continue to help improve outcomes
for patients with severe and critical conditions."
Mr. Olafsson continued, "I would like to thank the Mallinckrodt team for their resilience and
dedication to our company's mission. We also thank our customers,
vendors, suppliers and other partners for their ongoing support as
we work together to meet our patients' needs. As we move forward,
we are continuing to deliver the important therapies that patients
depend on us to provide."
Continuing to Operate as Normal
Mallinckrodt is operating normally,
supporting patients with high-quality therapies, serving customers
and working with its business partners. Additionally, the Company's
Specialty Generics business will continue to operate under the
previously agreed upon operating injunction, which provides for
enhanced compliance and independent monitoring measures and has
been in place since October 2020. The
Company also fully intends to continue supporting patient groups
and patient advocacy programs, including through its Patient
Advocacy Advisory Board and patient assistance programs.
Following Court approval, which the Company expects to receive
shortly, Mallinckrodt will have in
excess of $450 million of liquidity
comprising cash, commitments received for $250 million in new financing from certain of its
creditors in connection with the RSA and new borrowing availability
from lenders under its asset-based loans. Together with cash
generated from ongoing operations, this liquidity is expected to be
sufficient to support the Company's continued operations during the
court-supervised process.
The Company has filed a number of customary motions seeking
Court approval to support its operations during this process,
including the continued payment of employee wages, salaries and
benefits without interruption. Mallinckrodt expects to receive approval for these
requests shortly. The Company intends to pay vendors and suppliers
in the ordinary course, including for any pre-petition amounts owed
at the time of filing.
In connection with the Chapter 11 filing, Mallinckrodt also intends to make certain filings
to commence Examinership Proceedings in Ireland, which are required to implement
certain Irish law aspects of the financial restructuring and allow
for emergence.
Additional Information
Additional information is available on Mallinckrodt's restructuring website at
www.MNKrestructuring.com.
Court filings and other information related to the proceedings
are available on a separate website administrated by the Company's
claims agent, Kroll, at
https://restructuring.ra.kroll.com/mallinckrodt2023; by calling
Kroll representatives toll-free at +1-844-245-7926, or
+1-646-440-4855 for calls originating outside of the U.S. or
Canada; or by emailing Kroll at
mallinckrodt2023info@ra.kroll.com.
Vendors, suppliers and trade partners should direct any
inquiries to the Company at +1-908-238-5650 or
Supplier.Inquiry@mnk.com.
Latham & Watkins LLP, Wachtell, Lipton, Rosen & Katz,
Arthur Cox LLP, Richards, Layton & Finger PA, and Hogan Lovells
US LLP are serving as Mallinckrodt's
counsel. Guggenheim Securities, LLC is serving as investment
banker, and AlixPartners LLP is serving as restructuring
advisor.
About Mallinckrodt
Mallinckrodt is a global business
consisting of multiple wholly owned subsidiaries that develop,
manufacture, market and distribute specialty pharmaceutical
products and therapies. The Company's Specialty Brands reportable
segment's areas of focus include autoimmune and rare diseases in
specialty areas like neurology, rheumatology, hepatology,
nephrology, pulmonology, ophthalmology and oncology; immunotherapy
and neonatal respiratory critical care therapies; analgesics;
cultured skin substitutes and gastrointestinal products. Its
Specialty Generics reportable segment includes specialty generic
drugs and active pharmaceutical ingredients. To learn more about
Mallinckrodt, visit
www.mallinckrodt.com.
Mallinckrodt uses its website as a
channel of distribution of important company information, such as
press releases, investor presentations and other financial
information. It also uses its website to expedite public access to
time-critical information regarding the Company in advance of or in
lieu of distributing a press release or a filing with the U.S.
Securities and Exchange Commission (SEC) disclosing the same
information. Therefore, investors should look to the Investor
Relations page of the website for important and time-critical
information. Visitors to the website can also register to receive
automatic e-mail and other notifications alerting them when new
information is made available on the Investor Relations page of the
website.
CAUTIONARY STATEMENTS RELATED TO FORWARD-LOOKING
STATEMENTS
Statements in this document that are not strictly historical,
including statements regarding future financial condition and
operating results, expected product launches, legal, economic,
business, competitive and/or regulatory factors affecting
Mallinckrodt's businesses, and any
other statements regarding events or developments Mallinckrodt believes or anticipates will or may
occur in the future, may be "forward-looking" statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
and involve a number of risks and uncertainties.
There are a number of important factors that could cause actual
events to differ materially from those suggested or indicated by
such forward-looking statements and you should not place undue
reliance on any such forward-looking statements. These factors
include risks and uncertainties related to, among other things: the
bankruptcy process, including the possibility that certain parties,
such as creditors that are not party to the RSA or the Company's
equity holders, may object to the plan of reorganization
contemplated by the RSA; the ability of Mallinckrodt and its subsidiaries to obtain
approval from the U.S. Bankruptcy Court for the District of
Delaware (the "Court") with
respect to motions or other requests made to the Court throughout
the course of the Chapter 11 proceedings and to negotiate, develop,
obtain court approval of, confirm and consummate the plan of
reorganization contemplated by the RSA or any other plan that may
be proposed within the Company's currently expected timeline or at
all, the effects of the Chapter 11 proceedings, including increased
professional costs, on the liquidity, results of operations and
businesses of Mallinckrodt and its
subsidiaries, including the Company's ability to operate normally,
support patients, serve customers, work with business partners and
abide by previously agreed upon compliance and monitoring measures;
the consummation of the transactions contemplated by the RSA,
including the ability of the parties to negotiate definitive
agreements with respect to the matters covered by the term sheets
included in the RSA, the occurrence of events that may give rise to
a right of any of the parties to terminate the RSA and the ability
of the parties thereto to receive the required approval by the
Court and to satisfy the other conditions of the RSA; Mallinckrodt's ability to comply with the continued
listing criteria of NYSE American LLC and the potential suspension
of trading of Mallinckrodt's ordinary
shares on, or delisting from, NYSE American LLC and the effects of
Chapter 11 on the interests of various constituents; fluctuations
in market price and trading volume of Mallinckrodt's ordinary shares; the ability to
maintain relationships with Mallinckrodt's suppliers, customers, employees and
other third parties as a result of, and following, its 2022
emergence from bankruptcy and any emergence upon completion of its
current Chapter 11 proceedings, as well as perceptions of the
Company's increased performance and credit risks associated with
its constrained liquidity position and capital structure, which
reflects a recently increased risk of additional bankruptcy or
insolvency proceedings; Mallinckrodt's
substantial indebtedness, its ability to generate sufficient cash
to reduce its indebtedness and its potential need and ability to
incur further indebtedness; Mallinckrodt's ability to generate sufficient cash
to service indebtedness even now that the pre-petition indebtedness
has been restructured and in light of the proposed financial
restructuring plan contemplated by the RSA; developing, funding and
executing Mallinckrodt's business plan
and ability to continue as a going concern; Mallinckrodt's capital structure upon completion of
the Chapter 11 proceedings; the comparability of Mallinckrodt's post-emergence financial results to
its historical results and the projections filed with the U.S.
Bankruptcy Court for the District of Delaware in the Company's 2020 Chapter 11
proceedings and the current Chapter 11 proceedings; changes in
Mallinckrodt's business strategy and
performance; Mallinckrodt's tax
treatment by the Internal Revenue Service under Section 7874 and
Section 382 of the Internal Revenue Code of 1986, as amended;
governmental investigations and inquiries, regulatory actions and
lawsuits, in each case related to Mallinckrodt or its officers; matters related to
the historical commercialization of opioids, including compliance
with and restrictions under the global settlement to resolve all
opioid-related claims; matters related to Acthar® Gel, including
settlement with governmental parties to resolve certain disputes
and compliance with and restrictions under the corporate integrity
agreement; scrutiny from governments, legislative bodies and
enforcement agencies related to sales, marketing and pricing
practices; pricing pressure on certain of Mallinckrodt's products due to legal changes or
changes in insurers' reimbursement practices resulting from recent
increased public scrutiny of healthcare and pharmaceutical costs;
the reimbursement practices of governmental health administration
authorities, private health coverage insurers and other third-party
payers; complex reporting and payment obligations under the
Medicare and Medicaid rebate programs and other governmental
purchasing and rebate programs; cost containment efforts of
customers, purchasing groups, third-party payers and governmental
organizations; changes in or failure to comply with relevant laws
and regulations; Mallinckrodt's and its
partners' ability to successfully develop or commercialize new
products or expand commercial opportunities; Mallinckrodt's ability to navigate price
fluctuations; competition; Mallinckrodt's and its partners' ability to protect
intellectual property rights, including in relation to ongoing
litigation; limited clinical trial data for Acthar Gel; clinical
studies and related regulatory processes; product liability losses
and other litigation liability; material health, safety and
environmental liabilities; business development activities;
attraction and retention of key personnel; the effectiveness of
information technology infrastructure including cybersecurity and
data leakage risks; customer concentration; Mallinckrodt's reliance on certain individual
products that are material to its financial performance;
Mallinckrodt's ability to receive
procurement and production quotas granted by the U.S. Drug
Enforcement Administration; complex manufacturing processes;
reliance on third-party manufacturers and supply chain providers;
conducting business internationally; Mallinckrodt's ability to achieve expected benefits
from prior restructuring activities or those contemplated in the
future; Mallinckrodt's significant
levels of intangible assets and related impairment testing; labor
and employment laws and regulations; natural disasters or other
catastrophic events; restrictions on Mallinckrodt's operations contained in the
agreements governing Mallinckrodt's
indebtedness; Mallinckrodt's variable
rate indebtedness; future changes to U.S. and foreign tax laws or
the impact of disputes with governmental tax authorities; and the
impact of Irish laws.
The "Risk Factors" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" sections of
Mallinckrodt's Annual Report on Form
10-K for the fiscal year ended December 30,
2022 and Quarterly Reports on Form 10-Q for the quarterly
periods ended June 30, 2023 and
March 31, 2023, and other filings
with the SEC, all of which are on file with the SEC and available
on Mallinckrodt's website at
http://www.sec.gov and http://www.mallinckrodt.com respectively,
identify and describe in more detail the risks and uncertainties to
which Mallinckrodt's businesses are
subject. The forward-looking statements made herein speak only as
of the date hereof and Mallinckrodt
does not assume any obligation to update or revise any
forward-looking statement, whether as a result of new information,
future events and developments or otherwise, except as required by
law.
1Filing entities include Mallinckrodt plc, substantially all of its U.S.
subsidiaries and certain of its international subsidiaries.
CONTACTS
Investor Relations
Daniel
Speciale
Senior Vice President, Finance and CFO, Specialty Generics
+1-314-654-3638
daniel.speciale@mnk.com
Derek Belz
Vice President, Investor Relations
+1-314-654-3950
derek.belz@mnk.com
Media
Michael Freitag /
Aaron Palash / Aura Reinhard / Catherine Simon
Joele Frank, Wilkinson Brimmer
Katcher
+1-212-355-4449
Government Affairs
Derek Naten
Vice President, Government Affairs
+1-202-459-4143
derek.naten@mnk.com
Mallinckrodt, the "M" brand mark and
the Mallinckrodt Pharmaceuticals logo are trademarks of a
Mallinckrodt company. Other brands are
trademarks of a Mallinckrodt company or
their respective owners. © 2023.
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SOURCE Mallinckrodt plc
