Transactions to be valued at an aggregate of U.S.$250 million
Commences Voluntary Proceedings under CCAA in Canada and Chapter 11 in the United States
Company to Continue Operating Business and Serving Customers
As Usual
MISSISSAUGA, Ontario,
Aug. 10, 2018 /PRNewswire/
-- Aralez Pharmaceuticals Inc. (NASDAQ: ARLZ) (TSX: ARZ)
("Aralez" or the "Company") announced today that it
intends to enter into purchase agreements with two separate
stalking-horse purchasers to sell its main operating businesses:
an agreement to sell its VIMOVO® royalties and Canadian
operations to Nuvo Pharmaceuticals Inc. ("Nuvo") in a
transaction valued at U.S.$110 million and an agreement to
sell its TOPROL-XL® Franchise to its secured lender, certain funds
managed by Deerfield Management Company, L.P., in a transaction
valued at U.S.$140 million. The
Company is also engaged in ongoing efforts to sell the assets not
being sold in either of the proposed transactions and intends to
wind down its operations following the consummation of the
sales.
The letters of intent signed with each of Nuvo and the Company's
secured lender included the material terms of each of the proposed
transactions. Each proposed transaction is subject to entry into
mutually agreeable definitive agreements, and in the case of Nuvo,
obtaining committed financing, which is expected to be provided by
the Company's secured lender. Aralez has agreed to negotiate
exclusively with Nuvo (with respect to the assets subject to the
proposed transaction with Nuvo) until August
19, 2018. Closing of each proposed transaction is subject to
the receipt of applicable regulatory approvals and the satisfaction
or waiver of other customary closing conditions. The proposed
transactions are not conditioned on one another and will be subject
to approval by the applicable courts supervising the Restructuring
Proceedings described below.
To facilitate the transactions, Aralez, along with its Canadian
subsidiary, Aralez Pharmaceuticals Canada Inc., has elected to
commence voluntary proceedings under Canada's Companies' Creditor Arrangement Act
(the "CCAA") in the Ontario Superior Court of Justice.
In connection with these proceedings, Aralez's subsidiaries
incorporated in the United States
and Ireland have elected to file
voluntary petitions under Chapter 11 of the Bankruptcy Code in the
U.S. Bankruptcy Court for the Southern District of New York (together with the CCAA proceedings,
the "Restructuring Proceedings").
"Following a thorough financial and strategic review, we believe
that these sales, together with an auction process under court
supervision are in the best interests of the Company and its
stakeholders," said Adrian Adams,
Chief Executive Officer of Aralez.
Aralez, together with its subsidiaries, intends to seek and
obtain customary relief from the courts to permit it to continue to
operate its business in the ordinary course without interruption
during the sale process. In addition, Aralez has obtained
commitments for debtor-in-possession ("DIP") financing of
approximately U.S.$15 million, from its secured lender, which
is subject to approval of the courts. The Company intends to use
the proceeds from the DIP financing, in addition to cash flow from
operations, to pay for all goods and services from vendors provided
after the CCAA and Chapter 11 filing date in accordance with their
current terms. In addition, the Company and its subsidiaries have
filed a number of customary pleadings seeking authorization from
the courts to pay certain pre-petition obligations, support their
business operations and transition them through the Restructuring
Proceedings and the sale process. These include the payment of
employee wages, salaries and benefits, and certain obligations to
vendors.
The sales and Restructuring Proceedings are the culmination of a
previously announced financial and strategic review undertaken by
the board of directors of the Company. While the Company continued
to address and improve its financial profile through several cost
savings initiatives, corporate restructurings (including of the
discontinuation of its U.S. commercial operations) and the Payment
In Kind deferral of its July 1, 2018
interest payment until August 15,
2018, it became increasingly apparent during the course of
the board's financial and strategic review, that absent the legal
protection afforded through the Restructuring Proceedings, the
Company's cash position would continue to deteriorate.
Following completion of the board's strategic review, after
careful consideration of all available alternatives and having
given due consideration to the interests of all stakeholders, the
boards of directors of the Company and each of its North American
and Irish subsidiaries, with the assistance, input and advice from
legal and financial advisors, have unanimously determined that a
sale process under court supervision is in the best interests of
the companies. Rob Harris, a
director of the Company, abstained from voting on these matters due
to a potential conflict of interest relating to the ongoing sale
process. In connection with the filing and to facilitate the
administration of the Restructuring Proceedings more efficiently,
the size of the Board of Directors of the Company has been reduced
to four members, consisting of: Arthur
Kirsch (Chair), Kenneth Lee,
Martin Thrasher, and Adrian Adams, with the following directors
resigning: Seth Rudnick,
Neal Fowler and Rob Harris.
Aralez is being advised by Moelis & Company LLC and Alvarez
& Marsal as its financial advisors and Willkie Farr & Gallagher LLP and Stikeman
Elliott LLP as U.S. and Canadian legal counsel, respectively.
Additional Information
Additional information is available on the Company's website at
www.aralez.com, on EDGAR at www.sec.gov, and on SEDAR at
www.sedar.com. Court filings and other information related to the
court-supervised proceedings are available at a website
administered by the Company's claims agent, Primeclerk, at
https://cases.primeclerk.com/Aralez.
In connection with the proceedings to be commenced today in the
Ontario Superior Court of Justice under the CCAA, the Company
intends to seek approval for the appointment of Richter Advisory
Group Inc. as monitor. In that capacity, Richter Advisory Group
Inc. will work with management throughout the Restructuring
Proceedings and the sale process while overseeing the CCAA
proceedings and reporting to the court. Information will also be
available at a website maintained by the Company's court-appointed
monitor in Canada in accordance
with the CCAA proceedings, Richter Advisory Group Inc., at
http://insolvency.richter.ca/A/Aralez-Pharmaceuticals.
For additional information, vendors and customers may call
1-877-676-4390 or e-mail at aralez@richter.ca.
About Aralez Pharmaceuticals Inc.
Aralez Pharmaceuticals Inc. is a specialty pharmaceutical
company focused on delivering meaningful products to improve
patients' lives by acquiring, developing and commercializing
products in various specialty areas. Aralez's Global Headquarters
is in Mississauga, Ontario, Canada
and the Irish Headquarters is in Dublin,
Ireland. More information about Aralez can be found at
www.aralez.com.
Cautionary Note Regarding Forward-Looking Statements
This press release includes certain statements that constitute
"forward-looking statements" within the meaning of applicable
securities laws. Forward-looking statements include, but are not
limited to, statements regarding entry into the purchase
agreements, sale of businesses and assets not proposed to be sold
in the proposed transactions, the winding down of operations
following sales, the commencement of the Restructuring Proceedings,
the Company's operations continuing uninterrupted in the
ordinary course of business during the Restructuring Proceedings,
including its intention to seek relief from the courts, and the
satisfaction of day-to-day obligations to employees, suppliers and
customers continuing to be met during the Restructuring
Proceedings, DIP financing and the use of proceeds from the DIP
financing, and the Company's strategies, plans, objectives, goals,
prospects, future performance or results of current and anticipated
products, and other statements that are not historical facts, and
such statements are typically identified by use of terms such as
"may," "will," "would," "should," "could," "expect," "plan,"
"intend," "anticipate," "believe," "estimate," "predict," "likely,"
"potential," "continue" or the negative or similar words,
variations of these words or other comparable words or phrases,
although some forward-looking statements are expressed
differently.
You should be aware that the forward-looking statements included
herein represent management's current judgment and expectations,
and are based on current estimates and assumptions made by
management in light of its experience and perception of historical
trends, current conditions and expected future developments, as
well as other factors that it believes are appropriate and
reasonable under the circumstances, but there can be no assurance
that such estimates and assumptions will prove to be correct and,
as a result, the forward-looking statements based on those
estimates and assumptions could prove to be incorrect. Accordingly,
actual results, level of activity, performance or achievements or
future events or developments could differ materially from those
expressed or implied in the forward-looking statements.
In addition, the Company's operations involve risks and
uncertainties, many of which are outside of the Company's control,
and any one or any combination of these risks and uncertainties
could also affect whether the forward-looking statements ultimately
prove to be correct and could cause the Company's actual results,
level of activity, performance or achievements or future events or
developments to differ materially from those expressed or implied
by the forward-looking statements. These risks and uncertainties
include, without limitation, the uncertainty involved in the
Restructuring Proceedings and entering into definitive agreements
with each of Nuvo and the Company's secured lender on mutually
agreeable terms or at all; risks related to restructuring costs;
the Company's financing and liquidity; the cooperation of the
creditors of the Company; the Company's ability to meet its ongoing
obligations during the Restructuring Proceedings; the ability of
the Company to maintain relationships with its employees, suppliers
and customers and other third parties in light of the events
leading up to and including the Restructuring Proceedings; the
ability to obtain goods and services in a timely and cost effective
manner; the Company's ability to comply with its financial and
other covenants; the Company's ability to obtain approval from the
courts with respect to any motions; the outcome of the
Restructuring Proceedings; the courts' rulings in the Restructuring
Proceedings or a decision of any other Canadian or U.S. court; in
general, the length of time the Company will operate under the
Restructuring Proceedings, risks associated with any third-party
motions, the potential adverse effects of the Restructuring
Proceedings on the Company's liquidity; competition, including
increased generic competition (including with respect to the
Toprol-XL Franchise); strategic alternatives not being available on
reasonable terms, or at all; the Company's inability to maintain
key personnel necessary to manage the business; the Company's
failure to successfully commercialize its products and product
candidates; costs and delays in the development and/or approval of
the Company's product candidates, including as a result of the need
to conduct additional studies or due to issues with third-party API
or finished product manufacturers, or the failure to obtain such
approval of the Company's product candidates for all expected
indications or in all targeted territories; with respect to certain
products, dependence on reimbursement from third-party payors and
the possibility of a failure to obtain coverage or reduction in the
extent of reimbursement; the inability to maintain or enter into,
and the risks resulting from the Company's dependence upon,
collaboration or contractual arrangements necessary for the
development, manufacture, commercialization, marketing, sales and
distribution of any products, including the Company's dependence on
AstraZeneca AB and Horizon Pharma USA, Inc. for the sales and marketing of
Vimovo and the Company's dependence on AstraZeneca AB for the
manufacture and supply of Toprol-XL and the authorized generic; the
Company's dependence on maintaining and renewing contracts with
customers, distributors and other counterparties (certain of which
may be under negotiation from time to time), including the
Company's inability to renew existing contracts or enter into new
contracts on favorable terms, and the risks that we may not be able
to maintain the Company's existing terms with certain customers,
distributors and other counterparties; the Company's ability to
protect its intellectual property and defend its patents, including
if generic competitors successfully appeal the recent District
Court decision with respect to certain Vimovo patents; regulatory
obligations and oversight; failure to successfully identify,
execute, integrate, maintain and realize expected benefits from new
acquisitions, such as the acquisitions of Tribute, Zontivity and
the Toprol-XL Franchise; fluctuations in the value of certain
foreign currencies, including the Canadian dollar, in relation to
the U.S. dollar, and other world currencies; changes in laws and
regulations, including tax laws and unanticipated tax liabilities
and laws and regulations regarding the pricing of pharmaceutical
products; general adverse economic, market and business
conditions; and those risks detailed from time-to-time under
the caption "Risk Factors" and elsewhere in the Company's
Securities and Exchange Commission (SEC) filings and reports and
Canadian securities law filings, including in the Company's Annual
Report on Form 10-K for the year ended December 31, 2017 and Quarterly Report on Form
10-Q for the three month period ended March
31, 2018, which are available on EDGAR at www.sec.gov, on
SEDAR at www.sedar.com, and on the Company's website at
www.aralez.com. You should not place undue importance on
forward-looking statements and should not rely upon this
information as of any other date. We undertake no obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise, unless
required by law.
Aralez Pharmaceuticals Inc. Contact:
Christopher Bona
312-329-3918
info@aralez.com
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SOURCE Aralez Pharmaceuticals Inc.