Santhera Pharmaceuticals updates on convertibles exchange and options

Chicago, April 6 – Santhera Pharmaceuticals Holding AG reaffirmed its ongoing exchange offer and reminded noteholders that they may participate in two different ways. Both and simultaneously bondholders may accept the exchange offer and vote on the bondholder’s resolution if they have held the bonds since March 5.

The two decisions are completely independent from one another, according to a press release.

The exchange offer is open until noon ET on April 19.

If the initial exchange is successful, a second exchange period will begin on April 21 and end at noon ET on April 27.

As previously reported, the company launched an exchange offer for its CHF 60 million 5% convertible bonds due 2022 (ISIN: CH0353955195).

The company seeks to exchange all of the bonds in circulation.

At a meeting on March 8, the company sought to amend the terms of the bonds. At that meeting, the company failed to get the required threshold of two-thirds of all bonds outstanding to amend the terms, even though a large majority of bondholders at the meeting voted in favor of the amendments.

The company is offering for each bond with a nominal value of CHF 5,000 26 shares of Santhera and one new 7.5% convertible bond due Aug. 17, 2024 with a nominal value of CHF 3,375 and a significantly reduced conversion price, to be issued by the company and to be listed on the SIX Swiss Exchange.

Highbridge Tactical Credit Master Fund, LP, holder of 32% of the bonds in circulation, will accept the exchange offer.

The company believes that the restructuring of the convertibles is needed to enable it to raise additional financing and therefore crucial to keep the company as a going concern until after it has received such financing.

The exchanged convertibles would have a conversion price per share of 115% of the lower of CHF 4.80 or the daily VWAP of one share for the five trading days preceding the settlement of the exchange offer and not less than CHF 2.50.

The maturity date would be pushed to Aug. 17, 2024 from Feb. 17, 2022.

The interest on the notes would be increased to 7.5% from 5%, newly payable in cash or at the option of the company in shares at a 10% discount to the then-prevailing market price of the shares.

There would be a make-whole payment for early redemption, whereas there is no make-whole redemption currently.

For the right to redeem the bonds, the conversion price would be 150% on the new notes versus 160% previously.

The company must exchange at least 50% of the bonds for the exchange offer to happen.

Additional consents are being sought at a bondholders’ meeting that require a two-thirds majority.

Should the company receive the necessary consents, the original bond restructuring would be pursued and the exchange offer would be terminated.

Settlement is planned for May 4.

Dario Eklund, chief executive officer of the company said “Such a restructuring of Santhera’s capital structure is the best way to secure the company’s operations past the six-month Vision-DMD data readout, after which, if positive, we will seek additional financing to fuel our future growth plans.”

Stifel Nicolaus Europe Ltd. is the financial adviser to the company.

Santhera is a Liestal, Switzerland-based pharmaceutical company.

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