The Dublin-headquartered company — which earlier this week put the planned flotation of its Athlone-based drug delivery subsidiary, EDT, on ice due to continuing disappointing market conditions — is to offer “subject to market conditions”, $200 million (€155m) in bonds to institutional buyers.
The company, chiefly known for its co-ownership of the Tysabri multiple sclerosis drug, is set to refinance its debt by offering the above value in senior notes, carrying a coupon of 8.75%, due to mature in six years time. The re-financing would also see a combination of $100m, or so, of existing cash reserves and the proceeds from the bond issuance used to redeem the company’s $300m of floating rate notes, due to mature in 2011.
Last Tuesday, when it announced its decision on the future of the EDT business, Elan’s management stated its aim of lowering its debt levels by around 20% — or $300m — in the next couple of years; taking the total from its current level of $1.54bn to around $1.24bn.
“Elan will also have gross cash approaching $400m at the end of the year, assuming that the Zonegran settlement has been paid. With Tysabri also continuing to generate cash, this provides the company with plenty of scope to invest in its emerging pipeline,” said Jack Gorman of Davy Stockbrokers.
Elan’s share price was down by 15c — or 3.61% — to €3.90, yesterday.