UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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| Item 7.01. | Regulation FD Disclosure. |
Beginning on June 1, 2021, Mallinckrodt plc, an Irish public limited company (“Mallinckrodt”) commenced discussions and negotiations with the members of an ad hoc group of holders (the “Noteholders”) of a majority in aggregate principal amount of the 10.000% First Lien Senior Secured Notes due 2025 (the “First Lien Notes”) issued by Mallinckrodt International Finance S.A. and Mallinckrodt CB LLC, two wholly owned subsidiaries of Mallinckrodt (the “Issuers”) with respect to the possible treatment of claims in respect of the First Lien Notes under a proposed plan of reorganization in the bankruptcy case of Mallinckrodt and certain of its subsidiaries (a “Potential Transaction”).
Each of the Noteholders has entered into a confidentiality agreement with Mallinckrodt. Pursuant to the confidentiality agreements, Mallinckrodt has agreed to disclose publicly information provided by Mallinckrodt to the Noteholders that constitutes material non-public information on a specified date. The information in this Current Report on Form 8-K is being furnished, in part, to satisfy Mallinckrodt’s public disclosure obligations under the confidentiality agreements.
As of June 14, 2021, Mallinckrodt has not reached agreement with the Noteholders. The last draft of the applicable term sheet circulated by Mallinckrodt to the Noteholders with respect to a Potential Transaction (which draft was expressly subject in all respects to the support of certain parties to the Debtors’ restructuring support agreement and was circulated on such basis) contemplated the following terms:
| Term |
Debtor Proposal | |
| Amount (“Exchange Ratio”) | Equivalent to the Optional Redemption price in the existing indenture at the Exit Date (T+50 until 4/15/22, then the call schedule) plus 2.00% of par | |
| Notes | Senior Secured First Lien Notes (the “Exchange First Lien Notes”) | |
| Issuers | Mallinckrodt International Finance S.A. and Mallinckrodt CB LLC | |
| Obligors | • Same as the obligors on Deferred Cash Payments, provided that any obligations on account of the Exchange First Lien Notes shall be guaranteed by the same entities that guarantee the (i) existing First Lien Notes, (ii) existing credit agreement debt, as amended and/or restated, and (iii) Takeback Second Lien Notes
• Subject to satisfactory diligence around exclusion of Mallinckrodt Holdings GmbH | |
| Coupon | Payable in cash at 6.25% | |
| Maturity | 7 years following Plan Effective Date | |
| Collateral/Priority | Pari passu with the existing credit agreement debt, as amended and/or restated | |
| Put | Puttable to the issuer at 101% of par upon a change of control | |
| Equity Claw | Equity claw consistent with current indenture for two years post emergence, subject to any equity offering proceeds being first used to pay down the tort prepayment option | |
| Call Protections | • T+50 make whole for 3 years after Plan Effective Date
• Callable at 103.125% of par in year 4
• Callable at 101.563% of par in year 5
• Par thereafter | |
| Covenants | Substantially same covenants as credit agreement debt as amended, adjusted for indenture-style documentation (including removing non indenture-style provisions) | |
| Optional Redemption Alternative | At the Company’s option, in lieu of issuing the Exchange First Lien Notes, existing First Lien Notes may be refinanced at, or prior to, exit at the Exchange Ratio plus accrued and unpaid interest | |
| Exit Fee | None | |
| Other | • No change to terms of existing 2L notes, other than potential modification of covenants to match 1L notes
• Exchange consummated on the effective date of the Ch. 11 plan
• [Tax and bankruptcy implications to be reviewed and exact exchange mechanism TBD]
• 1L noteholders to agree to not make any intercreditor claims while RSA is in effect, or following Plan Effective Date in respect of the existing 1L notes claims
• 1L and 2L noteholders to sign a joinder agreement and amendment to the RSA
• 1L and 2L noteholders signing RSA required to agree to support plan with respect to all claims and interests | |
By contrast, the previous proposal circulated by the Noteholders to Mallinckrodt with respect to a Potential Transaction contemplated the following terms:
| Term |
Noteholder Proposal | |
| Amount (“Exchange Ratio”) | Equivalent to the Optional Redemption price in the existing indenture at the Exit Date (T+50 until 4/15/22, then the call schedule) | |
| Notes | Senior Secured First Lien Notes (the “Exchange First Lien Notes”) | |
| Issuers | Mallinckrodt International Finance S.A. and Mallinckrodt CB LLC | |
| Obligors | • Same as the obligors on Deferred Cash Payments, provided that any obligations on account of the Exchange First Lien Notes shall be guaranteed by the same entities that guarantee the (i) existing First Lien Notes, (ii) existing credit agreement debt, as amended and/or restated, and (iii) Takeback Second Lien Notes
• Subject to satisfactory diligence around exclusion of Mallinckrodt Holdings GmbH | |
| Coupon | Payable in cash at 7.00% | |
| Maturity | 6 years following Plan Effective Date; April 15, 2025 if >$50 million of existing 2L Notes outstanding on or after January 15, 2025 | |
| Collateral/Priority | Pari passu with the existing credit agreement debt, as amended and/or restated | |
| Put | Puttable to the issuer at 101% of par upon a change of control | |
| Equity Claw | Equity claw consistent with current indenture for two years post emergence, subject to any equity offering proceeds being first used to pay down the tort prepayment option | |
| Call Protections | • T+50 make whole for 3 years after Plan Effective Date
• Callable at 103.50% of par in year 4
• Callable at 101.75% of par in year 5
• Par thereafter
• Call protection applies upon bankruptcy | |
| Covenants | Substantially same covenants as credit agreement debt as amended, adjusted for indenture-style documentation (including removing non indenture-style provisions) | |
| Optional Redemption Alternative | At the Company’s option, in lieu of issuing the Exchange First Lien Notes, existing First Lien Notes may be refinanced at, or prior to, exit at the Exchange Ratio + 3.5% of par plus accrued and unpaid interest | |
| Exit Fee | 3.5% fee earned upon execution of documentation reflecting terms herein; fee to be paid on the Plan Effective Date to all first lien noteholders based on existing principal | |
| Other | • Exchange consummated on the effective date of the Ch. 11 plan
• Tax and bankruptcy implications to be reviewed and exact exchange mechanism TBD
• 1L noteholders to agree to not make any intercreditor claims while RSA is in effect, or following Plan Effective Date in respect of the existing 1L notes claims
• 1L and 2L noteholders to sign a joinder agreement and amendment to the RSA | |
The information contained in this Item 7.01 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, except as otherwise expressly set forth by specific reference in such a filing.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| MALLINCKRODT PLC | ||
| By: | /s/ Bryan M. Reasons | |
| Bryan M. Reasons | ||
| Executive Vice President & Chief Financial Officer (principal financial officer) | ||
Date: June 14, 2021
Document and Entity Information |
Jun. 14, 2021 |
|---|---|
| Cover [Abstract] | |
| Document Type | 8-K |
| Document Period End Date | Jun. 14, 2021 |
| Entity Registrant Name | Mallinckrodt plc |
| Entity Incorporation, State or Country Code | L2 |
| Entity File Number | 001-35803 |
| Entity Tax Identification Number | 98-1088325 |
| Entity Address, Address Line One | College Business & Technology Park |
| Entity Address, Address Line Two | Cruiserath |
| Entity Address, Address Line Three | Blanchardstown |
| Entity Address, City or Town | Dublin |
| Entity Address, Postal Zip Code | 15 |
| Entity Address, Country | IE |
| Country Region | 353 |
| City Area Code | 1 |
| Local Phone Number | 696 0000 |
| Written Communications | false |
| Soliciting Material | false |
| Pre-commencement Tender Offer | false |
| Pre-commencement Issuer Tender Offer | false |
| Entity Emerging Growth Company | false |
| Entity Central Index Key | 0001567892 |
| Amendment Flag | false |
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