Vancouver’s Angiotech Pharmaceuticals Inc. (TSX:ANP) has entered into an agreement that will see much of its debt converted into shares to avert going into default with its debt holders,
The company announced it has entered into a support agreement where approximately 73% of holders of its 7.75% senior subordinated notes will exchange their notes for new common stock in Angiotech.
As of June 30, Angiotech’s long-term debt consisted of $325 million in senior floating rate notes due December 1, 2013, and $250 million in 7.75% senior subordinated notes.
The recapitalization transaction would eliminate $250 million from its balance sheet, and provide significant improvements to the company’s credit ratios, liquidity and financial flexibility.
Thomas Bailey, Angiotech’s CFO said, “Our innovation initiatives will require significant capital to support their growth and success and we have been able to work out a consensual transaction with our note holders that we believe will better align our company’s capital structure with our business strategy.”
As a result of the deal, existing holders of Angiotech stock will hold 2.5% of the issued and outstanding shares of Angiotech and will be given the option to acquire 10% of the new common stock, subject to a shareholder vote in favour of the transaction, or an exemption order obtained by the company.
As part of the agreement, consenting note holders agreed to extend the grace period for the semi-annual interest payment to November 30. It was originally set to be paid October 1. However, the company said it expects it will require an additional extension to complete the recapitalization transaction.
Angiotech’s share price range during the past week: between $0.62 and $0.50; 52-week high: $1.54; 52-week low: $0.43.
Angiotech was trading at $0.305 Monday morning, a 39% drop from Friday's close ($0.50).