LAKE FOREST, Ill., May 20, 2020 /PRNewswire/ -- Akorn, Inc. (Nasdaq:
AKRX), a leading specialty pharmaceutical company ("Akorn" or the
"Company"), today announced that the Company and its U.S.
subsidiaries filed for voluntary protection under Chapter 11
("Chapter 11") of the U.S. Bankruptcy Code in United States Bankruptcy Court for the
District of Delaware (the
"Bankruptcy Court") to execute an in‑court sale of its business
while addressing litigation-related overhangs and best positioning
the business for long-term success under new ownership. In
connection with the filing, the Company has executed a
Restructuring Support Agreement with lenders representing more than
80% of its secured debt, who will collectively serve as a "stalking
horse" bidder in the Company's sale process and provide additional
liquidity to fund the Company's business operations during this
process.
In accordance with the Company's previously announced sale
process, Akorn will use the legal protections of the Chapter 11
process to execute a sale of its business in accordance with the
milestones set forth in the Restructuring Support Agreement. As a
result of negotiations, Akorn and certain of its existing lenders
have agreed to a Stalking Horse Asset Purchase Agreement ("Stalking
Horse APA") whereby the existing lenders will serve as the
"stalking horse" bidder in the court-supervised sale of the
business, which will be subject to further marketing during the
Chapter 11 process in accordance with the Company's proposed bid
procedures. Other buyers will continue to have the opportunity to
improve on this bid for the Company.
To help fund and protect its operations during the Chapter 11
process, Akorn obtained consent to use cash collateral from all of
its existing lenders and received commitments from certain of its
lenders for $30 million in
debtor-in-possession ("DIP") financing. Upon approval of the
Bankruptcy Court, the DIP financing will provide the Company and
its U.S. subsidiaries with ample liquidity to fund their business
operations and administrative expenses during the Chapter 11
cases.
Akorn is confident in the underlying strength of its business
and plans to continue to operate as usual throughout the duration
of the Chapter 11 and sale process, including meeting its
contractual obligations and making payments to vendors. The Company
has filed customary motions with the Bankruptcy Court intended to
allow Akorn to maintain normal operations and fulfill its
go-forward commitments to customers, suppliers, associates and
other stakeholders. These motions are typical in the Chapter 11
process and Akorn anticipates they will be heard and approved in
the first few days of the case.
Doug Boothe, Akorn's President
and Chief Executive Officer, commented, "Today's announcement
represents a decisive, positive step for Akorn, one that we have
been able to achieve because of the underlying strength of our
business and potential for growth. We look forward to separating
legacy litigation and debt from the Company's most valuable assets
– our products, our people, our manufacturing facilities and our
knowledge – so that we can move forward unencumbered by these
liability exposures under new ownership that believes in our
future."
"The current public health crisis has re-emphasized that the
work our associates do tirelessly each and every day is vital to
those we serve. I anticipate that today's decisive action will
allow us to be better positioned to continue this work for many
years to come."
The Chapter 11 cases include Akorn and each of its U.S.
subsidiaries. The Company's entities in India and Switzerland are not included in the Chapter 11
filing.
The Company is working to complete the sale process in the third
quarter of 2020 and emerge as a more vibrant company, even better
positioned to improve patients' lives through the quality,
availability and affordability of its products.
Additional information about the Chapter 11 cases can be found
at Akorn's dedicated microsite, www.akorn-forward.com. Claims
information can be found at www.kccllc.net/akorn.
Akorn is advised in this matter by Kirkland & Ellis as legal
advisor, PJT Partners as financial advisor and AlixPartners as
restructuring advisor.
About Akorn
Akorn, Inc. is a specialty pharmaceutical company engaged in
the development, manufacture and marketing of multisource and
branded pharmaceuticals. Akorn has manufacturing
facilities located in Decatur, Illinois; Somerset, New
Jersey; Amityville, New York;
Hettlingen, Switzerland and Paonta
Sahib, India that manufacture ophthalmic, injectable and
specialty sterile and non-sterile pharmaceuticals. Additional
information is available on Akorn's website
at www.akorn.com.
Cautionary Note Regarding Forward-Looking
Statements
This press release includes statements that may
constitute "forward-looking statements," including statements
regarding the Chapter 11 Cases, the DIP Facility, the Company's
ability to complete the sale and its ability to continue operating
in the ordinary course while the Chapter 11 Cases are pending. You
can identify forward-looking statements by terminology such as
"may," "should," "will," "expect," "continue," "believe," "seek,"
"anticipate," "estimate," "intend," "could," "would," "potential,"
or the negative of such terms or other similar expressions. These
statements are made pursuant to the safe harbor provisions of
Section 27A of the Securities Act and Section 21E of the Exchange
Act. These statements are subject to significant risks,
uncertainties, and assumptions that are difficult to predict and
could cause actual results to differ materially and adversely from
those expressed or implied in the forward-looking statements,
including risks and uncertainties related to: (i) the consummation
of the sale; (ii) potential adverse effects of the Chapter 11 Cases
on the Company's liquidity and results of operations; (iii) the
Company's ability to obtain timely approval by the Bankruptcy Court
with respect to the motions filed in the Chapter 11 Cases; (iv)
objections to the Stalking Horse APA, Bidding Procedures, DIP
Facility, or other pleadings filed that could protract the Chapter
11 Cases; (v) employee attrition and the Company's ability to
retain senior management and other key personnel due to the
distractions and uncertainties; (vi) the Company's ability to
comply with the restrictions imposed by the terms and conditions of
the DIP Facility and other financing arrangements; (vii) the
Company's ability to maintain relationships with suppliers,
customers, employees and other third parties and regulatory
authorities as a result of the Chapter 11 Cases; (viii) the effects
of the Chapter 11 Cases on the Company and on the interests of
various constituents, including holders of the Company's common
stock; (ix) the Bankruptcy Court's rulings in the Chapter 11 Cases,
including the approvals of the terms and conditions of the sale and
the DIP Facility, and the outcome of the Chapter 11 Cases
generally; (x) the length of time that the Company will operate
under Chapter 11 protection and the continued availability of
operating capital during the pendency of the Chapter 11 Cases; (xi)
risks associated with third party motions in the Chapter 11 Cases,
which may interfere with the Company's ability to consummate the
sale or an alternative transaction; (xii) increased administrative
and legal costs related to the Chapter 11 process; potential delays
in the Chapter 11 process due to the effects of the COVID-19 virus;
(xiii) other litigation and inherent risks involved in a bankruptcy
process; and (xiv) such other risks and uncertainties outlined in
the risk factors detailed in Part I, Item 1A, "Risk Factors," of
the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2019 (as filed with the
Securities and Exchange Commission ("SEC") on February 26, 2020), Part II, Item 1A, "Risk
Factors," of the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 2020
(as filed with the SEC on May 11,
2020) and other risk factors identified from time to time in
the Company's filings with the SEC. Readers should carefully review
these risk factors, and should not place undue reliance on the
Company's forward-looking statements. These risks and uncertainties
may cause actual future results to be materially different than
those expressed in such forward-looking statements. The Company
undertakes no obligation to update any forward-looking statements
to reflect changes in underlying assumptions or factors, new
information, future events or other changes.
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SOURCE Akorn, Inc.