Item 1.01 Entry Into A Material Definitive Agreement.
On October 16, 2023, Amneal Pharmaceuticals, Inc. (the “Company”), Amneal Pharmaceuticals LLC (the “LLC”), and a representative (the “Amneal Group Representative”) of holders of the Company’s Class B Common Stock, par value $0.01 per share (the “Amneal Legacy Group”), executed a binding term sheet (the “Term Sheet”) pursuant to which the Company and the LLC have agreed to reorganize and simplify the Company’s corporate structure by eliminating the Company’s umbrella partnership-C-corporation (“Up-C”) structure and converting to a more traditional structure in which all stockholders hold their voting and economic interests directly through the public company and the Amneal Group Representative consented to the Reorganization and agreed to use its reasonable best efforts to ensure the Amneal Legacy Group cooperates to effect the terms of the Term Sheet and the Reorganization as soon as reasonably practicable. As a result of this agreement, the Company plans to reorganize certain corporate entities (the “Reorganization”), subject to approval of the Reorganization transactions by the Company’s board of directors (the “Board of Directors”) or the conflicts committee of the Board of Directors, as the case may be. As part of the Reorganization, the Company plans to form a new Delaware corporation (“NewCo”) with a single class of common stock as a new holding company of the Company that will replace the Company as a listed company. In connection with the Reorganization, holders of shares of Class A common stock, par value $0.01 per share (the “Class A Common Stock”), of the Company will cease to hold such shares and will receive an equivalent number of shares of Class A common stock, par value $0.01 per share, of NewCo that have the same voting and economic rights as the Company’s existing Class A Common Stock.
The Company is targeting completion of the Reorganization in November 2023.
The foregoing is a summary of the material terms of, and is qualified by, the Term Sheet, a copy of which is attached hereto as Exhibit 10.1, and is incorporated by reference herein.
Item 7.01 Regulation FD Disclosure.
The Reorganization is intended to (1) improve the Company’s cash flows by eliminating the Company’s tax-related distributions resulting from the current Up-C structure, (2) enhance transparency of the Company’s corporate structure for investors, and (3) reduce operational complexity and administrative costs relating to maintaining and managing the current structure. As a point of reference, during the six months ended June 30, 2023, the Company made tax-related cash distributions of $30 million. The Company expects the improved cash savings resulting from the Reorganization to increase the Company’s financial flexibility and enable it to reduce its debt over time.
The information contained in Item 7.01 of this Current Report on Form 8-K is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Cautionary Note Regarding Forward-Looking Statements
This Current Report on Form 8-K contains “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements include all statements that are not historical facts, including without limitation statements regarding the Company’s plans to pursue the Reorganization and the expected timing and benefits of the Reorganization. In some cases, you can identify these forward-looking statements by the use of words such as “anticipate,” “aim,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “might,” “objective,” “outlook,” “plan,”