Mallinckrodt to issue $650 million first-lien notes before emergence

By Sarah Lizee

Olympia, Wash., May 20 – Mallinckrodt plc has agreed to issue $650 million of new 11½% 6.5-year first-lien senior secured notes ahead of the expected effective date of its Chapter 11 plan of reorganization, according to an 8-K filed Friday with the Securities and Exchange Commission.

According to a term sheet for the notes,  Mallinckrodt International Finance SA and Mallinckrodt CB LLC will be the issuers.

The initial purchase price will be 98% of the principal amount.

There is no amortization.

The notes are non-callable absent payment of a make-whole for five years from the effective date of the Chapter 11 plan. After that, they will be callable at par.

They are putable to the issuers at 101 upon a change of control.

Covenants are similar to those governing the existing first-lien notes but are subject to modifications.

Proceeds will be used to pay fees and expense incurred in connection with entry into a new $900 million senior secured covenant-lite term loan B due Sept. 30, 2027, which launched in late April.

Dublin-based Mallinckrodt develops, manufactures, markets and distributes specialty pharmaceutical products and therapies. The company filed Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware on Oct. 12, 2020 under case number 20-12522.

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