Elan completes tenders for series B, series C guaranteed notes

New York, Nov. 30 - Elan Corp. plc and its wholly owned subsidiary, Elan International Services Ltd., said that they had accepted for payment a total of $350.971 million principal amount of series B and series C guaranteed notes issued by Elan's wholly owned subsidiary, Elan Pharmaceutical Investments III Ltd.

The company said that amount includes $317.406 million of notes previously accepted for payment and paid for by Elan International Services and Elan. The notes were tendered and related consents delivered as part of Elan's previously announced cash tender offer to purchase up to $351 million (of $390 million) of notes, which expired as scheduled on Nov. 26, without extension. Final settlement was expected to occur Nov. 30.

As of the expiration, $372.182 million of the notes were tendered and related consent delivered. Elan accepted for payment, on a pro rata basis, $350.971 million of notes for total consideration of $357,410,884, plus accrued and unpaid interest up to but not including the applicable settlement date. The total consideration included a total early tender premium of $4,489,884, paid only for notes tendered by the prior to the Nov. 10 early tender deadline, and a total consent payment of $1.95 million. Consent payments were made to all noteholders regardless of whether the holders tendered their notes or delivered consents.

As a result, Elan entered into an amendment to the guarantee agreement governing its guarantee of the notes and a consent agreement under the indenture governing the 6½% convertible guaranteed notes issued by Elan Capital Corp. Ltd. and guaranteed by Elan.

As previously announced, Elan, a Dublin, Ireland-based biotechnology company, said on Oct. 28 that it had begun a cash tender offer through its Elan International Services Ltd. subsidiary for up to $351 million of the $390 million principal amount of the guaranteed notes and was also soliciting consents to amend the guarantee agreement for the notes and the 6½% convertible guaranteed notes issued by Elan Capital Corp. Ltd.

It set an early tender deadline of midnight ET on Nov. 10 and said that the tender offer would expire at midnight ET on Nov. 26, subject to possible extension.

The company said the consents would effectively waive compliance with all covenants restricting certain activities of Elan and its subsidiaries without the prior consent of holders of a majority of the notes. Elan said it would need the consent of holders of a majority of the principal amount of the notes to make the change. It said that holders could not tender without delivering consents.

The company said that holders tendering by the early tender deadline would receive total compensation of $1,013.50 per $1,000 principal amount, including an early tender premium of $13.50 per $1,000 principal amount.

Holders tendering after the early deadline but before the expiration deadline would receive par for the bonds.

Elan said that in either case, it would pay accrued interest up to but excluding the settlement date and would additionally pay a consent fee of $5 per $1,000 if it were to receive tenders of a majority of the notes.

The company said the tender would be subject to the receipt of tenders and consents of at least a majority of the principal amount of the notes and completion of a debt financing on acceptable terms. Elan also announced the sale of $850 million of new notes (on Nov. 10, Elan sold an upsized offering of $1.15 billion of fixed-rate and floating-rate notes).

On Nov. 11, the company said that it had received the required amount of consents needed to approve the proposed changes to the notes' indentures. The consents were received by the early consent deadline.

As a result of the receipt of the required consents, Elan said that it expected to enter into an amendment to the guarantee agreement for the notes incorporating the desired changes. The amendment and the consent agreement will become effective only upon the pro rata acceptance for purchase of the notes tendered.

It said that notes tendered could no longer be withdrawn and consents delivered could no longer be revoked.

On Nov. 17, Elan said that it had received tenders and consents from the holders of $352.682 million of the notes by the early tender deadline, which expired as scheduled at midnight ET on Nov. 10, without extension.

Elan said that under the terms of the tender offer and consent solicitation, Elan International Services and Elan Corp. accepted for payment and paid for, on a pro rata basis, $317.406 million principal amount of the notes (representing about 90% of the notes tendered) for total consideration of $323,640,981, plus accrued and unpaid interest to date. The total consideration included a total early tender premium of $4,284,981 and a total consent payment of $1.95 million. The consent payments were made to all holders of the notes regardless of whether the holders tendered their notes or delivered consents.

The company said that at the scheduled Nov. 26 expiration time, Elan and Elan International Services expected to accept for payment, on a pro rata basis, an additional $33.594 million total principal amount of notes tendered by the expiration, including, if necessary, a portion of the additional $35.276 million total principal amount of notes tendered prior to the early tender deadline and not previously accepted for payment (bringing the total principal amount of notes accepted for payment to $351 million.

It further said that any notes not accepted for payment on the final settlement date as a result of the pro rata acceptance of notes - including notes tendered prior to the early tender deadline and not previously accepted for purchase - would be returned to the holders promptly following the final settlement date.

Morgan Stanley & Co. Inc. was the dealer manager (800 624-1808 or 212 761-1941 (collect), attention Francesco Cipollone).

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