Orexigen files for Chapter 11, plans to hold auction for assets

New York, March 12 – Orexigen Therapeutics, Inc. filed for Chapter 11 on Monday in the U.S. Bankruptcy Court for the District of Delaware.

The company said in a news release that it plans to hold an auction and sale process under section 363 of the bankruptcy code which would require bidders to make an offer for all its assets.

The assets would be sold free and clear of the company’s debt and other liens and interests.

Orexigen expects to have a deadline for bids of May 21, to begin the auction on May 24 and to close the sale by July 2.

“The board and management team have thoroughly assessed all of our strategic options and believe that this process represents the best possible solution for Orexigen, taking into account our financial needs,” said Michael Narachi, president and chief executive officer, in a news release.

“While we have been working closely with our noteholders and have the support of a controlling number of senior secured noteholders, our debt covenant requirements and near-term cash flow needs have necessitated the protection afforded by a court-driven process.”

Orexigen has obtained a debtor-in-possession financing commitment for $70.35 million from a controlling group of its senior secured noteholders, according to an 8-K filing with the Securities and Exchange Commission.

The facility includes $35 million of new term loans and roll up loans for $35 million under which pre-bankruptcy senior secured notes will be converted into DIP facility obligations. In addition, a $350,000 fee to the DIP lenders will be capitalized.

Interest on the DIP loan is Libor plus 1,000 basis points.

The loan matures on the earlier of the closing of the sale of assets, a default and July 31.

Wilmington Trust, NA is administrative agent, and the lenders are Baupost Group Securities, LLC, EcoR1 Capital Fund, LP, EcoR1 Capital Fund Qualified, LP, 1992 MSF International Ltd, 1992 Tactical Credit Master Fund, LP, Nineteen77 Global Multi-Strategy Alpha Master Ltd. and Nineteen77 Global Multi-Strategy Alpha (Levered) Master Ltd.

The bankruptcy filing triggered an event of default on the company’s 2.75% convertible senior notes due 2020, 0% convertible senior secured notes due 2020 and 2.75% convertible senior exchange notes due 2020.

Orexigen said in its Chapter 11 filing that it had $265.10 million of assets and $226.40 million of liabilities as of Nov. 30, 2017.

Baupost Group LLC, GLG LLC and Domain Associates, LLC each own more than 5% of the voting securities of the company. Baupost’s stake is 11.8% of the common stock.

U.S. Bank NA as trustee to the company’s 2.75% convertible exchange senior notes due 2020 has the largest unsecured claim at $38,942,000, Wilmington Trust, NA as trustee for the 2.75% convertible senior notes due 2020 has the second largest unsecured claim at $25,343,000.

Other unsecured creditors with claims over $1 million are VML, Inc. with $13,903,843 of trade debt, McKesson Specialty Arizona, Inc. with a $7.5 million savings card adjudicator claim, Cardinal Health 105, Inc. with a $5,541,434 title model settlement claim, Young & Rubicam, Inc. with $5,162,397 of trade debt and Inventiv Commercial Services with $3,775,000 of trade debt.

Hogan Lovells US LLP is legal counsel and Perella Weinberg Partners LP and Ernst & Young LLP are financial advisers.

The case number is 18-10518.

Orexigen is a San Diego-based biopharmaceutical company focused on the treatment of obesity.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.