Troubled Concordia, the Canadian drugmaker often compared to fellow price hiker Valeant, said on Thursday it had made a deal with creditors, replaced its CEO, and all but wiped out shareholders. That’s quite an upheaval, and it has one aim: financing.
The pharma company inked a deal with the bulk of its creditors to raise capital of $586 million in a private placement, gain $1.4 billion of new debt, and rework its debt load to reduce it to $2.4 billion.
Concordia will save about $171 million on interest because of the refi. With a new stash of funding and those savings, the company will be set up to pay its bills—and employees—for now and benefit shareholders long-term, Concordia said in a statement.
Thing is, those shareholders won’t be Concordia’s current investors—not in any meaningful way, that is. They’ll get one share for every 300 shares they own, and after the refinancing will own just 0.35% of the company. The debtholders will end up owning almost 100%.
Employees will lose stock options, and their shares will be treated the same way as everyone else’s, meaning they’ll be diluted down to practically nothing.
That’s not a huge loss at today’s prices, though. Concordia’s Nasdaq shares fell deeper into penny-stock territory—26 cents—on Friday, down from a high point of $84.17 in September 2015. That’s more than a 99% decrease in value in a few short years.
Also losing out in the restructuring is CEO Allan Oberman, who’s stepping aside. Graeme Duncan, president of Concordia International, will take the top chair as interim CEO rather than leaving the company at the end of June as he’d previously planned. Chief Corporate Development Officer Sarwar Islam is leaving immediately, too.
By Tracy Staton
Source: Fierce Pharma
Giovanni Caforio, the former CEO of Bristol Myers Squibb, is set to become the next board chairman of Novartis, which on Tuesday proposed the pharmaceutical industry veteran as its pick to replace Joerg Reinhardt in the role next year. Reinhardt has served as Novartis’ chair since 2013 and plans to retire when his 12-year term ends in 2025.
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Scientists from the University of Edinburgh’s School of Chemistry have revealed a new sustainable method of manufacturing complex molecules that could reduce waste produced during drug production. The method published in Nature Chemistry could help to prevent severe side effects caused by drugs that can exist as enantiomers.
