Mallinckrodt to launch offer to exchange 2022 notes for 2025 notes

By Marisa Wong

Los Angeles, Feb. 25 – Mallinckrodt plc and wholly owned subsidiaries Mallinckrodt International Finance SA and Mallinckrodt CB LLC have agreed to exchange their existing 5¾% senior notes due 2022 for new 10% second-lien senior secured notes due 2025, according to an 8-K filing with the Securities and Exchange Commission.

Mallinckrodt entered into a support and exchange agreement on Feb. 25 with Aurelius Capital Master, Ltd., Franklin Advisers, Inc. and Capital Research and Management Co. to begin, by no later than March 20, a private offer to exchange any and all of the 2022 notes for new 2025 notes.

The issuers will be offering $1,000 of new notes for every $1,000 of existing notes exchanged.

Mallinckrodt will also launch by no later than March 20 a solicitation of consents from holders of the 2022 notes to amend the indenture governing the 2022 notes.

The proposed amendments would eliminate or waive substantially all of the restrictive covenants contained in the indenture governing the 2022 notes; eliminate some events of default; modify covenants regarding mergers and the transfer of assets; and modify and eliminate some other provisions, including covenants regarding future guarantors and provisions relating to defeasance.

Under the agreement entered into on Tuesday, Aurelius Capital, Franklin Advisers and Capital Research have agreed to tender in the exchange offer all of their existing 2022 notes; deliver their consents in the consent solicitation; and, if the aggregate principal amount of new notes issued under the exchange offer is less than $610,304,000, exchange their 5 5/8% senior notes due 2023 for an amount of new 2025 notes equal to the excess, if any, by which the exchange cap exceeds the amount of new notes to be issued in exchange for the 2022 notes.

If exchanged, the 2023 notes would be exchanged at a rate of $900 of new notes for every $1,000 of existing notes.

The holders under the support and exchange agreement collectively hold about $271 million of the 2022 notes and roughly $255 million of the 2023 notes.

The exchange offer will be subject to some closing conditions, including the funding of new term loans and an amendment to the company’s credit agreement.

Additionally, the exchanging holders under the exchange agreement, who also hold the issuers’ 4 7/8% senior notes due 2020, have consented to an amendment to the 2020 notes that reduces the optional redemption notice period to three business days from 30 days.

Mallinckrodt manufactures specialty pharmaceutical products and is based in Staines-upon-Thames, United Kingdom.

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