VANCOUVER, Oct. 29 /PRNewswire/ - Angiotech Pharmaceuticals,
Inc. (NASDAQ: ANPI; TSX: ANP) ("Angiotech" or the "Company") today
announced that the Company has entered into a Recapitalization
Support Agreement (the "Support Agreement") with the holders (the
"Consenting Noteholders") of approximately 73% of its 7.75% Senior
Subordinated Notes (the "Subordinated Notes") to effectuate a
recapitalization of the Company that will result in a significant
reduction of its debt. Upon implementation, the
recapitalization transaction will eliminate $250 million in total indebtedness and provide
significant improvements to Angiotech's credit ratios, liquidity
and financial flexibility.
"After a challenging period in our Company's
financial history, we are now able to announce the completion of a
necessary transaction proposal with our noteholders," said Dr.
William Hunter, President and CEO of
Angiotech. "Our highly dedicated team has remained focused on
our Company's long-term objectives throughout this period, and we
believe this transaction will provide the financial foundation we
will need to pursue our innovation and commercial strategies for
our many exciting products, including our Quill surgical products
franchise, our proprietary interventional radiology products and
the launch of our 5-FU eluting anti-infective medical device
product candidates."
Thomas Bailey,
Chief Financial Officer of Angiotech, said "Our innovation
initiatives will require significant capital to support their
growth and success, and we have been able to work out a consensual
transaction with our noteholders that we believe will better align
our Company's capital structure with our business strategy."
Under the Support Agreement, the Consenting
Noteholders have agreed to exchange their Subordinated Notes for
new common stock in the Company (the "Exchange Offer"). The
Exchange Offer will be open to all qualifying holders of the
Subordinated Notes (the "Noteholders") and Noteholders
participating in the Exchange Offer would receive 90% of the new
common stock of Angiotech issued and outstanding following the
completion of the recapitalization transaction, subject to
potential dilution. The Noteholders that agree to the terms
of the Support Agreement by November 30,
2010 will be entitled to receive, as additional
consideration, 3.5% of the new common stock of Angiotech
(distributed on a pro rata basis) issued and outstanding at the
completion of the recapitalization transaction, subject to
potential dilution.
The Company has also entered into a support
agreement (the "FRN Support Agreement") with holders of
approximately 51% of principal amount of the Company's existing
floating rate notes (the "Existing Floating Rate Notes") for the
exchange of Existing Floating Rate Notes for new floating rate
notes (the "New Floating Rate Notes"). The Exchange Offer
will be open to all qualifying holders of the Existing Floating
Rate Notes. The New Floating Rate Notes will be secured by a
second lien over the assets, property and undertaking of the
Company and certain of its Subsidiaries and will otherwise be
issued on substantially the same terms and conditions as the
Existing Floating Rate Notes other than certain amendments to
certain covenants in respect of the incurrence of additional
indebtedness and liens and change of control. Pursuant to the
Support Agreement, the obligation of the Consenting Noteholders to
complete the recapitalization transaction is conditional on the
completion of the transactions contemplated by the FRN Support
Agreement.
Holders of common stock of Angiotech on the date
the recapitalization transaction is completed will hold 2.5% of the
issued and outstanding common stock of Angiotech, as well as
options to acquire 10% of the new common stock with a strike price
that provides for a par recovery to the Noteholders, subject to a
shareholder vote in favour of the recapitalization transaction or
the obtaining of an exemption order, and subject to potential
dilution. All existing options, warrants or other rights to
purchase common stock of Angiotech at the completion of the
recapitalization transaction will be cancelled. Members of
Angiotech management holding common stock intend to support the
recapitalization transaction.
Under the Support Agreement, holders of at least
98% of the aggregate principal amount of the Subordinated Notes
must consent to the Exchange Offer (the "Minimum Exchange Offer
Threshold") on or before January 7,
2011. The Company may be required to pursue the
recapitalization transaction pursuant to a plan of arrangement
under the Canada Business Corporations Act ("CBCA") if the
Minimum Exchange Offer Threshold is not met, following a
continuance of Angiotech to the CBCA. Under the Support Agreement,
Angiotech may also be required to pursue the completion of the
recapitalization transaction pursuant a plan of compromise or
arrangement under the Companies' Creditors Arrangement Act
(the "CCAA") and/or other court proceedings.
Under the Support Agreement, the Consenting
Noteholders consented to an extension of the grace period
applicable to the $9.7 million
semi-annual interest payment due on October
1, 2010 until November 30,
2010. Angiotech expects that it will require an additional
extension in order to complete the recapitalization
transaction.
Any recapitalization transaction contemplated by
the Support Agreement may be subject to governmental, court,
regulatory, shareholder and third party approvals, as applicable,
as well as the satisfaction or waiver of all the conditions of the
Support Agreement, and the Company can give no assurances that any
such recapitalization transaction will be completed. The Support
Agreement may also be terminated by Consenting Noteholders or the
Company in certain circumstances.
The Support Agreement also contemplates as a
condition of implementation to a recapitalization transaction that
the Company's credit facility with Wells Fargo Capital Finance LLC
be amended, refinanced or replaced on such terms and with such
maturity date acceptable to Angiotech and the Consenting
Noteholders such that the new credit facility will provide the
Company and its affiliates with not less than $25 million and no more than $35 million in liquidity upon implementation of
the recapitalization transaction. It is also a condition that
a stock-based incentive plan satisfactory to the Company and the
Consenting Noteholders be established that will provide over the
life of the plan for the grant of common stock and options of up to
15% of the new common stock, subject to potential dilution, as well
as vesting and other considerations consistent with such
stock-based incentive plans.
The Support Agreement and the FRN Support
Agreement will be filed by the Company on both SEDAR and EDGAR, and
the descriptions of the Support Agreement and the FRN Support
Agreement contained in this press release are qualified by the full
text of the Support Agreement and the FRN Support Agreement,
respectively.
In connection with the recapitalization
transaction, the Company has retained the Blackstone Group LP as
its financial advisor and Osler,
Hoskin & Harcourt LLP and Willkie
Farr & Gallagher LLP as its legal advisor. The
Noteholders have retained Houlihan Lokey
Howard & Zukin as their financial advisor and Goodmans
LLP and Latham & Watkins LLP as their legal advisors.
This press release is neither an offer to
purchase nor a solicitation of an offer to sell Angiotech's
securities and is not being made to, nor will tenders be accepted
from, or on behalf of, holders of Subordinated Notes or Existing
Floating Rate Notes in any jurisdiction in which the making of the
exchange offers and consent solicitations or the acceptance thereof
would not be in compliance with the laws of such jurisdiction.
Forward Looking Statements
Statements contained in this press release that are not based on
historical fact, including without limitation statements containing
the words "believes," "may," "plans," "will," "estimates,"
"continues," "anticipates," "intends," "expects" and similar
expressions, constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of
1995 and constitute "forward-looking information" within the
meaning of applicable Canadian securities laws. All such statements
are made pursuant to the "safe harbor" provisions of applicable
securities legislation. Forward-looking statements may involve, but
are not limited to, comments with respect to our objectives and
priorities for the remainder of 2010 and beyond, our strategies or
future actions, our targets, expectations for our financial
condition and the results of, or outlook for, our operations,
research and development and product and drug development. Such
forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results,
events or developments to be materially different from any future
results, events or developments expressed or implied by such
forward-looking statements. Many such known risks,
uncertainties and other factors are taken into account as part of
our assumptions underlying these forward-looking statements and
include, among others, the following: general economic and business
conditions in the United States,
Canada and the other regions in
which we operate; market demand; technological changes that could
impact our existing products or our ability to develop and
commercialize future products; competition; existing governmental
legislation and regulations and changes in, or the failure to
comply with, governmental legislation and regulations; availability
of financial reimbursement coverage from governmental and
third-party payers for products and related treatments; adverse
results or unexpected delays in pre-clinical and clinical product
development processes; adverse findings related to the safety
and/or efficacy of our products or products sold by our partners;
decisions, and the timing of decisions, made by health regulatory
agencies regarding approval of our technology and products; the
requirement for substantial funding to conduct research and
development, to expand manufacturing and commercialization
activities; and any other factors that may affect our performance.
In addition, our business is subject to certain operating risks
that may cause any results expressed or implied by the
forward-looking statements in this press release to differ
materially from our actual results. These operating risks include:
our ability to attract and retain qualified personnel; our ability
to successfully complete pre-clinical and clinical development of
our products; changes in our business strategy or development
plans; our failure to obtain patent protection for discoveries;
loss of patent protection resulting from third-party challenges to
our patents; commercialization limitations imposed by patents owned
or controlled by third parties; our ability to obtain rights to
technology from licensors; liability for patent claims and other
claims asserted against us; our ability to obtain and enforce
timely patent and other intellectual property protection for our
technology and products; the ability to enter into, and to
maintain, corporate alliances relating to the development and
commercialization of our technology and products; market acceptance
of our technology and products; our ability to successfully
manufacture, market and sell our products; the availability of
capital to finance our activities; our ability to restructure and
to service our debt obligations; and any other factors referenced
in our other filings with the applicable Canadian securities
regulatory authorities or the Securities and Exchange Commission
("SEC"). For a more thorough discussion of the risks associated
with our business, see the "Risk Factors" section in our annual
report for the year ended December 31,
2009 filed with the SEC on Form 10-K, as amended, and our
quarterly report for the 2nd quarter of 2010 filed with the SEC on
Form 10-Q.
Given these uncertainties, assumptions and risk factors,
investors are cautioned not to place undue reliance on such
forward-looking statements. Except as required by law, we disclaim
any obligation to update any such factors or to publicly announce
the result of any revisions to any of the forward-looking
statements contained in this press release to reflect future
results, events or developments.
©2010 Angiotech Pharmaceuticals, Inc. All Rights
Reserved.
About Angiotech
Angiotech Pharmaceuticals, Inc. is a global specialty
pharmaceutical and medical device company. Angiotech
discovers, develops and markets innovative treatment solutions for
diseases or complications associated with medical device implants,
surgical interventions and acute injury. To find out more about
Angiotech (NASDAQ: ANPI, TSX: ANP), please visit our website at
www.angiotech.com.
SOURCE Angiotech Pharmaceuticals, Inc.
Copyright . 29 PR Newswire