Elan continues to improve capital structure, focuses on reducing upcoming debt maturities

By Jennifer Lanning Drey

Savannah, Ga., Oct. 27 - Elan Corp. plc continued to improve its capital structure during the third quarter, reducing debt by 17% during the period, Elan's chief financial officer Shane Cooke said on Wednesday during the company's third-quarter earnings conference call.

In the last year, Elan has reduced its debt load due in 2011 through 2013 by $1.3 billion, or almost 75%. The company has repaid or refinanced all of the $1.15 billion that was due in 2011 and $155 million of the amount due in 2013, Cooke said.

During the third quarter, Elan successfully completed a $200 million bond offering and used the proceeds plus other cash resources to retire $455 million of debt due between 2011 and 2013, Cooke noted.

The company ended the third quarter with $1.3 billion of debt, of which $460 million is due in November 2013. The balance is due in October 2016, Cooke said.

At Sept. 30, Elan had cash and cash equivalents of $423.4 million.

The company said it expects to end 2010 with about $400 million in cash and investments and be cash flow positive in 2011.

Improved operating performance

Elan also improved its operating performance during the third quarter. Adjusted EBITDA for the period increased by 61% to $38.2 million, and the company generated cash flow from operating activities for the third quarter in a row.

Cooke said Elan was particularly pleased with its performance in the first nine months of the year, during which revenues grew by 6% over the prior-year period. The increase was driven by continued growth of Tysabri and the recent launch of Ampyra, he said.

Revenues for the third quarter declined by 2%, compared the same period in 2009, which Cooke said the company believes represents a low point in its transition from older legacy products to higher growth products.

Third-quarter revenues were $281.4 million, down from $287.0 million in the same period of 2009.

Cooke said the company is on track to post revenue growth for the full year, as well as adjusted EBTIDA of $150 million or more, representing at least a 50% increase over full-year 2009.

Elan is a Dublin-based neuroscience-based biotechnology company.

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