Aegerion Pharmaceuticals files bankruptcy; plans sale to Amryt Pharma

By Sarah Lizee

Olympia, Wash., May 22 – Aegerion Pharmaceuticals, Inc., a subsidiary of Novelion Therapeutics Inc., filed for Chapter 11 bankruptcy on Monday in the U.S. Bankruptcy Court for the Southern District of New York.

Aegerion has entered into a plan funding agreement and a restructuring support agreement that will result in Aegerion selling 100% of its reorganized stock to, and becoming a wholly owned subsidiary of, Dublin-based Amryt Pharma plc, according to a Novelion press release.

In conjunction with the company’s recapitalization, Aegerion has entered into the RSA with many of its key stakeholders, including Novelion, the holders of in excess of 67% of the 2% convertible notes issued by Aegerion due 2019 and the holders of 100% of the principal amount under Aegerion’s other debt for borrowed money.

Recapitalization terms

Under the terms of the recapitalization, Aegerion will continue to operate in the ordinary course of business during the Chapter 11 process. The non-U.S. subsidiaries of Aegerion are not part of the Chapter 11 proceedings.

Pre-recapitalization shareholders of Amryt will continue to own 38.6% of the outstanding ordinary equity of Amryt, after giving effect to the restructuring transactions but before giving effect to equity underlying the new convertible notes, the deal equity raise, and any equity issued on account of the contingent value rights and under any management equity compensation plan adopted by Amryt.

The equity interests of Aegerion held by Novelion will be terminated.

Aegerion will issue $125 million of new 5% convertible notes. The new convertibles will be issued to some existing creditors of Aegerion in satisfaction of their claims (and not for cash), including in satisfaction of a portion of the existing convertible notes, the about $22 million of roll-up debt under the Aegerion’s existing bridge loan facility, and any amounts drawn down under Aegerion’s debtor-in-possession financing that are not otherwise satisfied in cash at the closing of the restructuring.

Aegerion’s existing bridge loan in the original principal amount of $50 million, held by funds managed by Athyrium Capital Management, LP and Highbridge Capital Management, LLC, as well as Amryt’s existing roughly €20 million of secured debt, will be converted into new first-lien secured debt of Amryt and Aegerion, which will have a cash interest rate of 6½% per annum and an additional 6½% PIK interest rate and mature five years from the closing date of the restructuring.

Amryt shareholders prior to the restructuring will receive a contingent value right entitling them to receipt of proceeds of up to $85 million upon the occurrence of milestones related to the regulatory approval and commercialization of AP 101, its late-stage development product candidate, with such payments to be made in loan notes or ordinary shares, at the election of its board.

Amryt plans to raise $60 million through the issuance of new equity of Amryt. The proceeds will be used to pay expenses and for general corporate purposes.

DIP financing

The debtors expect to enter into a $20 million super-priority DIP multi-draw term loan facility with Athyrium and Highbridge.

Any portion of the DIP financing that is drawn and not repaid in cash at closing of the restructuring will be converted into a portion of the $125 million of new convertible notes.

Debt details

According to court documents, the company has $100 million to $500 million in debt and $100 million to $500 million in assets.

The company’s largest unsecured creditors are Bank of New York Mellon Trust Co. of Chicago, with a $304,079,722 debt claim, the U.S. Department of Justice Consumer Protection Branch of Washington, D.C., with a $19,926,515 settlement agreement claim, the U.S. District Court of Massachusetts of Boston, with a $3,284,263.88 settlement agreement claim and the Securities and Exchange Commission of Washington, D.C., with a $1,167,906.16 settlement agreement claim.

Aegerion is a specialty pharmaceutical company based in Cambridge, Mass. The Chapter 11 case number is 19-11633.

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