Elan to pay off E195m of debt

Brian O’Mahony

It has already paid back $211.8m (E173.2m) and has agreed to retire a further $31m (25.3m) using cash and equity to buy back notes on the open market.

Elan said the reduction will cut up to $16m (E13m) from annual interest charges.

“These transactions will result in no additional dilution to our shareholders and will reduce our annual interest cost by about $16m (E13m),” said chief finance officer Shane Cooke.

Shares in the group were up 27 cent to 6.37, an increase of 4.43% on the day.

The number of shares issued to help pay off the debt was the same amount payable at the maturity of the convertible notes.

Elan bought $175m (E143m) and agreed to buy a further $31m (E25.3m) by 2008, 6.5% convertible guaranteed notes for about $255m (E208m), representing an average premium of about 4% to the market price, as part of the loan repayment plan.

The Athlone-based company also said it had bought $36.8m (E30m) of its ‘Athena Notes’, also due in 2008, leaving $613.2m (E501m) outstanding.

It faces a net charge of about $53m (E43.3m) in the second quarter of 2005 as a result of the move, while shareholders’ equity will have increased by $153m (E125m) at end March 2005.

In late February when the group announced it was withdrawing multiple sclerosis drug Tysabri from the market, the group’s shares plunged 69% at the time also to 6.37.

At one point the shares were trading at $65 in New York, before they were hit by a Securities and Exchange commission investigation in 2002.

Its shares rose sharply in Dublin following the recent AGM when chief executive Kelly Martin said he was confident multiple sclerosis drug would return to the market.

He also revealed Elan was continuing to manufacture the drug, as the take-up had been “extraordinary” when it had been on the market.

The company did not want the drug to be unavailable at any stage, he added.