Sector News

Debt-laden Concordia tosses CEO, washes out investors in refi plan

May 7, 2018
Life sciences

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

comments closed

Related News

September 25, 2022

Rise of the machines: Novo Nordisk pledges $200M to create first quantum computer for life sciences

Life sciences

Big Pharma has long seen the potential for AI and machine learning to accelerate drug development. But Novo Nordisk is going a step further by channeling $200 million toward the creation of a computer that will outrun anything in existence.

September 25, 2022

Mount Sinai AI uncovers new brain analysis method to predict dementia, Alzheimer’s disease

Life sciences

Current methods for diagnosing Alzheimer’s disease rely on a complex combination of self- and caregiver-reported symptoms, a physical examination and either a PET scan or a spinal tap to look for evidence of amyloid plaque build-ups in the brain. But a new artificial intelligence-based method may make the diagnostic process a much more objective one.

September 25, 2022

New AstraZeneca-backed report finds big money behind diverse owners and entrepreneurs in Europe

Life sciences

There is lots of talk about diversity and inclusion in business, including in pharma and medtech. A new report by the Open Political Economy Network (OPEN), a think tank focusing on migration and diversity, released its “Minority Businesses Matter: Europe” report highlighting the successes and challenges of ethnic minority-owned businesses in Europe.