Vital Pharmaceuticals files for Chapter 11 protection

BY Richard Summerfield

Vital Pharmaceuticals (VPX) – the manufacturer behind the Bang Energy drinks brand – has filed for Chapter 11 bankruptcy protection in the Southern District of Florida, a move it claimed would allow it to reorganise and regain market share from domestic rivals.

VPX’s restructuring efforts are being supported by $100m of additional financing from the company’s syndicate lenders to help ensure operations continue uninterrupted during the restructuring process.

“We are excited about our future, and particularly the new distribution system that we have spent the better part of this year assembling,” said Jack Owoc, chief executive and founder of VPX. “Utilizing our new state-of-the-art decentralized direct store distribution (DSD) will allow Bang Energy to get back to our pre-Pepsi meteoric annual success of several hundred percent year over year growth.

“The primary objective of our new DSD network is to regain the massive market share we earned prior to Pepsi and continue to achieve double digit growth and progress vigorously beyond 20% market share in energy drinks,” he continued. “Bang Energy’s new DSD network will launch nationwide and be closer to 100% as it officially completes its exit from the Pepsi relationship this month. This will be a comprehensive transition with no impact to product availability.”

VPX has endured a difficult period of late. Recently, the company lost a lawsuit against Monster Beverage Corp. In September, the company was ordered to pay Monster nearly $293m for interfering with its rival’s dealings with retailers and falsely advertising the mental and physical benefits of Bang drinks. The filing brings Monster’s lawsuit against VPX to an immediate halt.

The brand was previously distributed by the carbonated soft drinks (CSD) giant PepsiCo, until a disagreement between the two companies ended with Mr Owoc claiming PepsiCo “engaged in a premeditated plan to destroy Bang from day one”. PepsiCo has since bought into another energy drinks company, Celsius Holdings.

Immediately prior to VPX switching to Pepsi in early 2020, Bang’s share of the energy drink market was roughly 9.7 percent. Under Pepsi’s distribution, roughly 3.4 percent of that market share was lost. At $200m per share point, that equates to $680 million in today’s energy drink market, according to a VPX statement. Bang Energy’s newly orchestrated and soon-to-launch direct DSD network currently covers nearly 95 percent of the US market.

In August, speculation was rife that another CSD company – Keurig Dr Pepper (KDP) – was in talks to buy the VPX, with a deal worth $2-3bn being suggested in the press. Mr Owoc later confirmed no deal was in the pipeline, adding he “would never sell Bang Energy” for that amount.

News: VPX Seeks Chapter 11 Protection as It Transitions to World Class Distribution Network

Carestream Health files for Chapter 11 bankruptcy protection

BY Richard Summerfield

X-ray and medical imaging company Carestream Health has announced that it has voluntarily filed for reorganisation under Chapter 11 of the US Bankruptcy Code in the Bankruptcy Court for the District of Delaware.

The company, founded by Eastman Kodak Co, filed for bankruptcy protection with a lender-backed proposal which would cut its debt by $470m. Under the terms of the proposal, there will be a total debt reduction of $250m more than the company’s previously announced recapitalisation agreement. This process will significantly strengthen Carestream’s balance sheet and position the company for continued success.

“We are commencing the final stage of our recapitalization process, which will significantly enhance our ability to navigate a dynamic market,” said David C. Westgate, chairman, president and chief executive of Carestream. “Since announcing our recapitalization process in April, our lenders have remained overwhelmingly supportive, and we have worked constructively with them to complete the transaction. As our talks evolved, we determined the best course of action was to implement the agreement through an expedited court-supervised process.

“With a clear path to completion, we expect to emerge from this process as a stronger partner to our customers, with significantly reduced debt and new owners who also continue to believe in the future of Carestream. Carestream has strong market opportunities ahead. I am confident in the strength of our core business and our ability to maintain market leadership moving forward,” he added.

According to a statement announcing the filing, Carestream expects to continue operating normally throughout the court-supervised process and remains focused on serving its customers and working with suppliers on normal terms. Carestream expects to move through the Chapter 11 process on an expedited basis and complete the recapitalisation in approximately 35-45 days.

Carestream has secured an $80m debtor-in-possession financing facility from some of its existing lenders to reinforce its liquidity and fund the costs of the Chapter 11 process. Carestream entities outside the US are not part of the Chapter 11 process and will continue operating as normal.

News: Medical imaging company Carestream Health files Chapter 11 bankruptcy

Drugmaker Endo files for Chapter 11 amid opioid battles

BY Fraser Tennant

In a bid to weather a wave of opioid lawsuits, pharmaceutical company Endo International has filed for Chapter 11 bankruptcy as part of restructuring support agreement (RSA) with senior secured debtholders.

The company said that it initiated Chapter 11 proceedings to facilitate a sale process and provide an appropriate forum for bringing closure to opioid-related and other uncertainties, without recourse to costly and time-consuming litigation.

Under the terms of the RSA, the debtholder group has committed to providing total purchase consideration of approximately $6bn in the form of a credit bid, plus assumption of certain liabilities, for substantially all of Endo’s assets.

The RSA  will allow the company to advance its business transformation with a strengthened balance sheet to create compelling value for its stakeholders over the long term.

In addition, Endo has filed with the bankruptcy court a series of customary motions to maintain business-as-usual operations on all fronts and uphold its commitments to its stakeholders, including team members, customers, suppliers and business partners, during the Chapter 11 process.

Endo's India-based entities are not part of the Chapter 11 proceedings.

“The Chapter 11 process will enable us to continue our ongoing business transformation, including investing in our core areas of growth, as we work to execute a transaction to strengthen our balance sheet and secure a strong tomorrow,” said Blaise Coleman, president and chief executive of Endo. "By definitively addressing more than $8bn of debt that has burdened our balance sheet and establishing a pathway to closure with respect to thousands of opioid-related and other lawsuits, we will be able to move forward as a new Endo and reach our full potential."

Founded in 1997, Endo is a specialty pharmaceutical company committed to helping everyone it serves to live their best life through the delivery of quality, life-enhancing therapies. The company has global headquarters in Dublin, Ireland, with its US corporate office in Malvern, Pennsylvania.

“Our commitment to our mission, team members, customers, patients and communities will not change,” concluded Mr Coleman. “We look forward to emerging from this process better positioned to continue helping everyone we serve live their best lives.”

News: Endo files for bankruptcy as U.S. opioid litigation drags

Altera Infrastructure files for Chapter 11

BY Fraser Tennant

In a move designed to deleverage its balance sheet and position it for long term growth and success, global energy infrastructure services group Altera Infrastructure has filed for Chapter 11 bankruptcy so that it may implement a restructuring support agreement (RSA).

The RSA has been signed, or agreed to in principle by, holders of 80 percent of its funded debt obligations, which includes Brookfield Business Partners and approximately 91 percent of its bank lenders pending certain creditors’ internal credit approval processes.

The terms of the RSA contemplate more than $1bn of secured and unsecured holding company debt, $400m of preferred equity and $550m of secured asset-level bank debt, a comprehensive reprofiling of Altera’s bank loan facilities to better align cash flow with debt service obligations and the continued support of Altera’s equity sponsor, Brookfield.

In addition, Altera has obtained a commitment from Brookfield for a $50m debtor in possession (DIP) financing to help fund Altera’s restructuring process and ensure ordinary course operations remain unimpaired during the Chapter 11 process.

In conjunction with the petitions Altera has filed a series of motions, which, once approved by the bankruptcy court, will enable Altera to operate its business in the ordinary course without interruption. “We enter into this phase of our balance-sheet restructuring with the support of the majority of Altera’s secured lenders and equity sponsor Brookfield,” said Ingvild Sæther, chief executive of Altera Infrastructure Group Ltd.

A leading global energy services provider to the oil and gas industry, Altera focuses on supplying critical infrastructure assets to its customers in the offshore oil and gas regions of the North Sea, Brazil and the East Coast of Canada.

Altera’s fleet of 41 vessels includes floating production, storage and offloading units, shuttle tankers, long-distance towing and offshore installation vessels, as well as a unit for maintenance and safety.

Ms Sæther concluded: “We are confident that the Chapter 11 process will result in a comprehensive recapitalization transaction that will not only stabilise liquidity, but also deleverage our balance sheet and better position Altera for future growth.”

News: No impact to employees as Altera Infrastructure announces Chapter 11 bankruptcy

Space company Masten files for Chapter 11

BY Fraser Tennant

Signalling serious financial distress and putting at risk a NASA-funded mission to send one of its landers to the surface of the moon, pioneering NewSpace company Masten Space Systems has filed for Chapter 11 bankruptcy.

Masten is one of five companies that had won contracts from NASA to deliver payloads to the lunar surface. NASA issued an award originally valued at $75.9m to Masten in April 2020 to deliver a suite of experiments to the lunar surface using its XL-1 lander.

However, the NASA contract did not cover the entire cost of mission and Masten had difficulty raising additional funds by finding private payloads to fly to the lunar surface. Originally scheduled for 2022, the mission was pushed back to November 2023 because of what the company said in June 2021 were pandemic-related supply chain issues.

“NASA received notification its payloads slated for delivery aboard Masten Mission One may be impacted by Masten business operations,” said NASA in a statement. “The agency is working closely with the company to ensure that any potential changes comply with federal acquisition regulations. In the event Masten is unable to complete its task order, NASA will manifest its payloads on other flights.”

According to the Chapter 11 filing, Masten, based in Mojave, California, has estimated assets of between $10m and $50m, and estimated liabilities in the same range. Among the company’s creditors are SpaceX, Psionic LLC, Astrobotic Technology, NuSpace and Frontier Aerospace.

The filing follows months of losing key employees, including Sean Mahoney, chief executive, and Reuben Garcia, director of technical operations and manager of landing systems.

The company has also laid off 20 employees, including 15 engineers working on the XL-1 lander.

“Masten intends to use the Chapter 11 process to streamline its expenses, optimise its operations and conduct sale processes that maximise value for its unsecured creditors,” said Masten in a statement. “We expect the case to move quickly in order to minimise expenses.”

The company has also furloughed the remainder of its staff in the hope that they can be brought back if the company’s financial situation improves.

“We are hopeful that the Chapter 11 process will enable us to continue operations and deliver value for our customers and the space industry,” concluded Masten.

News: Space company Masten files for bankruptcy after struggle with NASA moon contract