Endo International files Chapter 11 with $6 billion credit bid from first-lien holders

By Sarah Lizee

Olympia, Wash., Aug. 17 – Endo International plc made an expected Chapter 11 filing late Tuesday, according to a press release from the company.

Endo said it has entered into a restructuring support agreement with holders of more than a majority of its first-lien debt on a sale transaction that would substantially reduce outstanding debt, address remaining opioid and other litigation-related claims, and best position Endo for the future.

Under a stalking horse bid, the debtholder group has committed to providing a total purchase consideration of about $6 billion in the form of a credit bid, plus assumption of liabilities, for substantially all of the company’s assets.

The purchaser will offer employment to all of Endo’s active team members; establish voluntary trusts, to be funded with $550 million over 10 years, whereby future proceeds will be set aside for certain opioid claims; and have net funded leverage in an amount no greater than 4.5x.

The credit bid is subject to higher and better offers.

There is no breakup fee, but there is an up to $7 million expense reimbursement.

Endo said it made the Chapter 11 filing to facilitate the sale process and provide an appropriate forum for bringing closure to opioid-related and other uncertainties without the need for continued costly, time-consuming litigation.

Endo’s India-based entities are not part of the Chapter 11 proceedings. The company expects to file recognition proceedings in Canada, the United Kingdom, and Australia.

“By definitively addressing the more than $8 billion of debt that has burdened our balance sheet and establishing a pathway to closure with respect to the thousands of opioid-related and other lawsuits that the company has been defending at an unsustainable cost, we will be able to move forward as a new Endo and reach our full potential,” Blaise Coleman, Endo’s president and chief executive officer, said in the release.

The company’s secured creditors have consented to use of cash collateral to fund the company’s day-to-day business during the process.

In addition, Endo and a consortium of state attorneys general have agreed on injunctive terms relating to the sale of Endo’s opioid products, including with respect to promotion, funding/grants to third parties, and suspicious order monitoring, which will be presented to the court for approval.

The company is filing with the court a series of customary first-day motions to maintain business-as-usual operations on all fronts and uphold its commitments to its stakeholders.

In its petition, the company listed $1 billion to $10 billion in both assets and liabilities.

Its largest unsecured creditors are Wells Fargo Bank, NA, based in New York, with a $1.27 billion 6% senior notes due 2028 claim, a $58.42 million 6% senior notes due 2023 claim and a $22.28 million 6% senior notes due 2025 claim, AmerisourceBergen Corp., based in West Chester, Ohio, with a $200.61 million distributer fees claim, McKesson Corp., based in Henrico, Va., with a $193.52 million distributer fees claim, Cardinal Health, based in Dublin, Ohio, with a $151.36 million distributer fees claim, and the Commissioner of Social Services Drug Rehab Program, based in Hartford, Conn., with a $22.98 million customer balances claim.

Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal counsel, PJT Partners LP is serving as investment banker, and Alvarez & Marsal is serving as financial adviser to Endo.

Endo is a Dublin, Ireland-based specialty pharmaceutical company. The Chapter 11 case number is 22-22549.

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