Mallinckrodt emerges from Chapter 11

February 2024 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

February 2024 Issue

With its balance sheet and financial flexibility significantly improved, global specialty pharmaceutical company Mallinckrodt plc has emerged from Chapter 11 bankruptcy following an expedited court-supervised restructuring process and the completion of Irish examinership proceedings.

Supported by an enhanced capital structure, the company has made meaningful recent progress to stabilise the business, including achieving year-over-year net sales growth for the second consecutive quarter and year-over-year adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) growth for the third quarter of 2023.

A global business consisting of multiple wholly owned subsidiaries that develop, manufacture, market and distribute specialty pharmaceutical products and therapies, Mallinckrodt’s specialty brands reportable segment’s areas of focus include autoimmune and rare diseases in specialty areas: neurology, rheumatology, hepatology, nephrology, pulmonology, ophthalmology and oncology, immunotherapy and neonatal respiratory critical care therapies, analgesics, cultured skin substitutes and gastrointestinal products.

Moving forward, Mallinckrodt plans to continue to focus on advancing its business across its portfolio and executing on recent and planned product launches.

“Mallinckrodt has emerged from this process as a stronger company, better positioned to advance our strategic and operational initiatives and achieve long-term success,” said Siggi Olafsson, president and chief executive of Mallinckrodt. “With a balance sheet that is now aligned with our business priorities, we are moving forward with renewed energy to continue strengthening our execution and performance. Our top priority remains delivering therapies that improve outcomes for patients with severe and critical conditions.”

As a result of the restructuring process, Mallinckrodt reduced its total funded debt by approximately $1.9bn and is moving ahead with ample liquidity to execute its strategic priorities. As contemplated by Mallinckrodt’s plan of reorganisation, ownership of the business transitioned to the company’s creditors and all of the company’s outstanding ordinary shares were extinguished at emergence.

“This process over the last several months could not have been possible without the support of many stakeholders,” continued Mr Olafsson. “We sincerely thank the Mallinckrodt teams for their dedication and continued commitment to serving our customers and patients during this process.”

In addition, alongside Mallinckrodt’s emergence, David Stetson, executive chairman of Alpha Metallurgical Resources, and Jon Zinman, a managing director at Silver Point Capital, have been appointed to the board, effective immediately. Mr Olafsson will continue to serve as a director and the new board will ultimately consist of seven members.

“Mr Zinman and Mr Stetson are highly experienced leaders who bring expertise in management, finance and corporate strategy, and I am delighted to welcome them to the board,” said Mr Olafsson. “We look forward to them guiding the company into its next phase. “We also thank our departing directors for their many contributions and service to Mallinckrodt.”

Serving as Mallinckrodt’s counsel was Latham & Watkins LLP, Wachtell, Lipton, Rosen & Katz, Arthur Cox LLP, Richards, Layton & Finger PA and Hogan Lovells US LLP. Guggenheim Securities, LLC served as investment banker and AlixPartners LLP served as restructuring adviser.

Mr Olafsson concluded: “Along with our patients, customers and partners for their unwavering trust in the business and our future, we also thank the support of our financial stakeholders to enable Mallinckrodt’s future success meeting patient needs.”

Fraser Tennant