Irish biotech company Elan has moved to restructure its debt and improve its financial flexibility with an $850 million (€664.5 million) bond issue.
The company, which had previously indicated its intent to tap bond markets late this year or early in 2005, said it would offer a mix of fixed and floating rate notes that would mature in 2011.
It will use the money to purchase $351 million of the $390 million of Elan Pharmaceutical Investments III Ltd (EPIL III) debts outstanding.
The move means the majority of debt-holders will receive payment ahead of schedule. The EPIL III notes were due for redemption in March 2005.
The balance of the fundraising will provide working capital and "other general corporate purposes", the company said.
On Thursday, Elan noted that it had $680.3 million in cash at the end of its third-quarter in September.
"Following the offering, Elan's debt will total just under $2 billion, of which 56 per cent will be due in 2008 and the remainder in 2011," said Mr Jack Gorman, analyst at Elan broker Davy.
Goodbody's Dr Ian Hunter said: "This move will give the company considerable flexibility not only in funding the launch of and continued promotion of Antegren but also the continued research into Alzheimer's and Parkinson's."
Elan is waiting for approval from the US Food and Drug Administration to begin selling Antegren to treat multiple sclerosis. The market has placed huge hopes on its success. The FDA is expected to sanction the drug before November 25th.
"The fundraising also gives weight to the stated intention of acquiring further [ drug] pipeline at the later stages of development," Dr Hunter added.
Elan will pay $13.50 for every $1,000 of EPIL III notes offered for repayment by November 10th. However, it requires the consent of the majority of debtholders to proceed. If successful, it will pay a $5 per $1,000 consent payment to all debt holders.
If more than $351 million of debt is offered for repayment, it will be accepted on a pro-rata basis. The outstanding $40 million of debt will be met by the sale of assets in the EPIL III portfolio.
