Elan Corporation plc (ELN, ELA.L) said Monday that its wholly-owned subsidiaries, Elan Finance public limited company and Elan Finance Corp. plans to offer $800.0 million in aggregate principal amount of Senior Notes due 2021. The Notes will be fully and unconditionally guaranteed by Elan and substantially all of its subsidiaries.
Elan stated that the net proceeds of the notes offering, plus an amount that would accrue on the notes through a specified date, will be deposited into escrow pending the closing of its previously announced pending royalty participation transaction with Theravance Inc.
Elan said following release of the net proceeds from escrow, it plans to use those net proceeds for general corporate purposes, including working capital requirements, capital expenditures, acquisitions and share repurchases.
If the closing of the Theravance Transaction does not occur on or prior to the escrow end date, the escrow proceeds will be used to redeem the Notes in full at a redemption price equal to 100% of the issue price of the Notes, plus accrued and unpaid interest from the issue date of the Notes to, but excluding, the redemption date.
The closing of the Theravance Transaction is not subject to any material conditions, other than timely approval of Elan's shareholders.
In a separate press release, Elan announced a series of transactions designed to decisively transform and advance the company.
Elan said it will acquire 100% of AOP Orphan Pharmaceuticals and upon close Elan will pay 263.5 million euros for the company. The purchase price comprised of 175.7 million euros in cash and 87.8 million euros of Elan ordinary shares. In addition, there will be potential cash milestone payments of up to 270 million euros on the advancement, filing and acceptance, of certain late stage clinical programs.
Additionally, Elan noted that it has completed the first step in its investment in Newbridge by paying $40 million in exchange for 48% of the total fully diluted capitalization of the company. In addition, Elan has appointed two Directors to the Board of Newbridge. Elan has the option to purchase the remaining stake in Newbridge by 2015 for a sum of $244 million.
Elan announced the divestment of ELND005 in to an independent company, Speranza Therapeutics, focused on progressing the development of ELND005 (Scyllo-inositol).
Elan added that it will commit $70 million to the new entity upfront , plus up to a potential future $8 million, for an 18% minority equity position, royalties in major markets along with additional milestones, and retention of commercial rights in certain territories and markets. The third party equity financial partner will commit $20 million for 62% equity position, plus up to a potential future $2 million. The remaining 20% equity will be allocated among Speranza management. This allows Elan to eliminate the operating activities associated with the development of the drug (2013 estimated spend: about $80 million), while at the same time maintaining a share of the potential upside.
Elan stated that it will convene an Extraordinary General Meeting to be held on Monday, June 17, 2013, to obtain the requisite shareholder approval.
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