SkyePharma tenders, seeks consents for £61 million 6½% bonds due 2024

By Susanna Moon

Chicago, March 31 - SkyePharma plc subsidiary SkyePharma (Jersey) Ltd. said it began a tender offer for its £60,822,124 6½% guaranteed bonds due 2024.

The company also is seeking approval for a waiver and modifications to the note terms to allow the company to redeem any remaining notes after the offer ends at 114.85% of the face amount, according to a press release.

Holders of about 79% of the outstanding bonds have said they plan to take part in the offer and vote in favor of the measure, the company said.

The outstanding amount is £60,822,124 after application of the pool factor of 0.731 and £83,204,000 before application of the pool factor.

The purchase price will be £1,148.50 for each £1,000 principal amount of bonds, or 114.85% of the face amount, which is equal to 157.11% of par, calculated by dividing 114.85% of the face amount of each bond by the pool factor.

Holders must tender their bonds by 11:59 p.m. ET on April 25, with settlement set for April 30. Those who tender their bonds must vote in favor of the extraordinary resolution at the meeting, which will be held in London on April 28.

The company is seeking a waiver to the requirement for the company or the guarantor to make payment of any deferred interest following receipt by the guarantor of the proceeds of the placement and open offer.

The company also is seeking to amend the conditions so that the earliest date that the bondholders may put the bonds will be April 30, 2019.

The offer is conditioned on the company obtaining proceeds from a capital raising and passing of the resolution to be considered at a shareholder meeting set for April 25.

The date for the execution of the supplemental trust deed and exercise of the call option has been set for April 30 with the early redemption date on May 2.

The tender and tabulation agent is Bank of New York Mellon, London Branch (+44 12 068 9644, fax +44 20 7964 2536 or email debtrestructuring@bnymellon.com).

Offer details, background

Skyepharma plc's directors believe that the guarantor's level of debt is serviceable by net cash generation from operations over the next few years, the press release noted, but its current focus on repayment of debt constrains opportunities to grow the business through product and corporate development and this could in turn have an impact on its attractiveness to investors.

In 2008, the guarantor took steps to restructure the outstanding convertible bonds by amending terms of those bonds, while conducting a placing and open offer to provide the guarantor with working capital and funds to invest in product development.

In 2012, the group implemented an additional bond restructuring, and some of the outstanding convertible bonds were converted into shares and other amendments were made to the terms of the bonds.

After the restructuring, the 2025 convertibles were exchanged for 2024 convertibles, and as part of the amendments, the 2024 convertibles were amended so that they were no longer convertible into shares. The bonds outstanding comprise the bonds that are the subject of the offer and the proposal, the company said.

The redemption price is a discount of £25.2 million compared with the payments that would have become payable until the normal earliest date when the holders could call for repayment of the bonds, which amounts to an internal rate of return to the group of 7.25%.

SkyePharma a London-based drug delivery company developing oral and inhalation products.

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