Monday, Angiotech Pharmaceuticals Inc. (ANPI), a global specialty pharmaceutical and medical device company, said that its board has authorized the company to create a new subsidiary, Angiotech Pharmaceutical Interventions Inc, or API. The company also said it has commenced a cash tender offer to purchase two of its senior notes for $165 million.
The company stated that API is being established as a Delaware corporation. The newly formed subsidiary will include Angiotech's Quill SRS technology and 5-flourouracil-eluting central venous catheter.
Immediately prior to the close of the transaction, Angiotech will enter into agreements with API to transfer certain assets and liabilities of Angiotech, which primarily include the various operating business assets and product development programs of Angiotech.
Existing Angiotech shareholders are expected to retain an initial ownership stake of between 52% and 68% in the new company.
Private equity investors, Ares Management and New Leaf Venture Partners, have committed to purchase between $200 million and $300 million of convertible notes issued by API. Angiotech said it will use the proceeds to reduce its debt.
By forming and capitalizing API, Angiotech said it has established a plan to achieve a more equity oriented capital structure for its operating businesses. By selectively reducing cash pay debt, Angiotech also expects the remaining royalty revenue derived from its partners BSC and Cook Group Inc. to be adequate to service any remaining debt.
The various assets, including the royalty business and API equity stake, owned by Angiotech will help to reduce or eliminate remaining Angiotech debt.
Angiotech said it expects its board to remain as comprised prior to the close of the transaction. William Hunter and Thomas Bailey will remain in their current positions as CEO and CFO of Angiotech respectively.
The API board is expected to include three members appointed by Angiotech's board, three members selected by Ares, and a new, independent director to be selected by Angiotech.
All of the executive officers, management and employees of Angiotech will continue in similar capacities with API. Angiotech's chief compliance officer, David Hall, is expected to be appointed as president of Angiotech upon the close of the transaction.
The transaction is expected to close later in the third quarter or early in the fourth quarter of 2008, subject to the approval of Angiotech's shareholders, and other customary conditions.
In a separate release, Angiotech said that it has commenced a cash tender offer for senior floating rate notes due 2013 and 7.75% senior subordinated notes due 2014 for an aggregate purchase price of $165 million. The tender offer will expire on August 22, while the settlement date is expected to be August 26.
Closing of the tender offer is conditioned upon the closing of the investment in API by Ares Management and New Leaf Venture, and shareholder approval.
ANPI is currently trading at $2.70, down 25 cents or 8.47%.
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