UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code:
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class |
Trading |
Name of each exchange | ||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry Into A Material Definitive Agreement.
On October 16, 2023, Amneal Pharmaceuticals, Inc. (the “Company”), Amneal Pharmaceuticals LLC (the “LLC”), and a representative (the “Amneal Group Representative”) of holders of the Company’s Class B Common Stock, par value $0.01 per share (the “Amneal Legacy Group”), executed a binding term sheet (the “Term Sheet”) pursuant to which the Company and the LLC have agreed to reorganize and simplify the Company’s corporate structure by eliminating the Company’s umbrella partnership-C-corporation (“Up-C”) structure and converting to a more traditional structure in which all stockholders hold their voting and economic interests directly through the public company and the Amneal Group Representative consented to the Reorganization and agreed to use its reasonable best efforts to ensure the Amneal Legacy Group cooperates to effect the terms of the Term Sheet and the Reorganization as soon as reasonably practicable. As a result of this agreement, the Company plans to reorganize certain corporate entities (the “Reorganization”), subject to approval of the Reorganization transactions by the Company’s board of directors (the “Board of Directors”) or the conflicts committee of the Board of Directors, as the case may be. As part of the Reorganization, the Company plans to form a new Delaware corporation (“NewCo”) with a single class of common stock as a new holding company of the Company that will replace the Company as a listed company. In connection with the Reorganization, holders of shares of Class A common stock, par value $0.01 per share (the “Class A Common Stock”), of the Company will cease to hold such shares and will receive an equivalent number of shares of Class A common stock, par value $0.01 per share, of NewCo that have the same voting and economic rights as the Company’s existing Class A Common Stock.
The Company is targeting completion of the Reorganization in November 2023.
The foregoing is a summary of the material terms of, and is qualified by, the Term Sheet, a copy of which is attached hereto as Exhibit 10.1, and is incorporated by reference herein.
Item 7.01 Regulation FD Disclosure.
The Reorganization is intended to (1) improve the Company’s cash flows by eliminating the Company’s tax-related distributions resulting from the current Up-C structure, (2) enhance transparency of the Company’s corporate structure for investors, and (3) reduce operational complexity and administrative costs relating to maintaining and managing the current structure. As a point of reference, during the six months ended June 30, 2023, the Company made tax-related cash distributions of $30 million. The Company expects the improved cash savings resulting from the Reorganization to increase the Company’s financial flexibility and enable it to reduce its debt over time.
The information contained in Item 7.01 of this Current Report on Form 8-K is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Cautionary Note Regarding Forward-Looking Statements
This Current Report on Form 8-K contains “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements include all statements that are not historical facts, including without limitation statements regarding the Company’s plans to pursue the Reorganization and the expected timing and benefits of the Reorganization. In some cases, you can identify these forward-looking statements by the use of words such as “anticipate,” “aim,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “might,” “objective,” “outlook,” “plan,”
“potential,” “predict,” “projection,” “seek,” “should,” “target,” “trend,” “will,” “would” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks, uncertainties, assumptions, or changes in circumstances that are difficult to predict or quantify. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors include, but are not limited to, those described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 and other reports filed by the Company from time to time with the Securities and Exchange Commission (“SEC”), which are accessible on the SEC’s website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in such filings. The Company undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
The following documents are herewith furnished as exhibits to this report:
| Exhibit No. | Description | |
| 10.1 | Term Sheet, dated as of October 16, 2023 among, the Company, Amneal Pharmaceuticals LLC and the Amneal Group Representative. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |
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.
| AMNEAL PHARMACEUTICALS, INC. | ||||||
| Date: October 17, 2023 | ||||||
| By: | /s/ Anastasios Konidaris | |||||
| Name: | Anastasios Konidaris | |||||
| Title: | Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) | |||||
Exhibit 10.1
Term Sheet
Amneal Pharmaceuticals, Inc.
This Term Sheet (the “Term Sheet”) is entered into as of October 16, 2023, by and among Amneal Pharmaceuticals, Inc., a Delaware corporation (“Old PubCo”), Amneal Pharmaceuticals LLC (“Opco”) and, solely for purposes of the Amneal Group Representative Consent (as defined below), the Amneal Group Representative1, on behalf of the Amneal Legacy Group. Each of Old PubCo and Opco may be referred to herein as a “Party” and collectively as the “Parties”.
Old Pubco and Opco wish to undergo a reorganization resulting in the elimination of the current umbrella partnership – corporation structure (“Up-C Structure”) of Old PubCo and Opco, subject to the terms and conditions set forth below (the “Reorganization”). As used herein, “Amneal Legacy Group” refers to those persons listed in the books and records of Old PubCo who hold both common units in Opco and shares of Class B common stock in Old PubCo prior to the consummation of the Reorganization.
| Overview |
Following the closing of the Reorganization (the “Closing”), and pursuant to the steps identified in the “Manner of Reorganization” section below:
1. A newly formed Delaware corporation (“New PubCo”) will be the direct owner of Old PubCo.
2. New PubCo, both directly and indirectly through Old PubCo, will be the owner of Opco.
3. The current holders of (i) Old PubCo Class A common stock (including the public stockholders) and (ii) Class B common stock and Opco common units (other than Old PubCo) will be the holders of Class A common stock of New PubCo.
New PubCo Class A common stock will have the same designations, rights, powers and preferences and qualifications, limitations and restrictions thereof as the Old PubCo Class A common stock. | |
| Amneal Group Representative Consent | The Amneal Group Representative hereby (i) consents to the Reorganization and (ii) agrees to use its reasonable best efforts to ensure that each member of the Amneal Legacy Group will cooperate and take such actions as reasonably |
| 1 | As defined in the Second Amended and Restated Stockholders Agreement dated as of December 16, 2017, by and among Amneal Pharmaceuticals Holding Company, LLC, a Delaware limited liability company, AP Class D Member, LLC, a Delaware limited liability company, AP Class E Member, LLC, a Delaware limited liability company, AH PPU Management, LLC, a Delaware limited liability company, and Amneal Pharmaceuticals, Inc. (which was previously known as Atlas Holdings, Inc.), a Delaware corporation, as amended. |
| necessary in order to effect the terms of this Term Sheet and effect the Reorganization as soon as reasonably practicable (collectively, the “Amneal Group Representative Consent”). | ||
| NYSE Listing and SEC Filings | Old PubCo shall ensure that New PubCo common stock will trade on NYSE under the “AMRX” ticker and New PubCo will maintain Old PubCo’s “accelerated filer” status and adopt Old PubCo’s Registration Statements on Forms S-3 and S-8 by filing post-effective amendments.
Old PubCo shall file an 8-K disclosing this Term Sheet, and the Amneal Legacy Group shall make appropriate Section 13/16 filings, in each case promptly after execution hereof. | |
| Manner of Reorganization | The Reorganization will be structured as follows:
1. Old PubCo forms New PubCo, a new Delaware corporation, as a direct, wholly-owned subsidiary.
2. New PubCo forms two direct, wholly-owned merger subsidiaries: Merger Sub 1, a Delaware corporation (“Merger Sub 1”) and Merger Sub 2, a Delaware limited liability company (“Merger Sub 2”).
3. Merger Sub 1 merges with and into Old PubCo with Old PubCo surviving (the “First Merger”) pursuant to Section 251(g) of the General Corporation Law of Delaware (“DGCL”).
4. As a result of the First Merger, the shares of Old PubCo Class A common stock and Old PubCo Class B common stock outstanding immediately before the First Merger convert, by operation of law, into an equal number of shares of New PubCo Class A common stock and New PubCo Class B common stock, with the same rights as Old PubCo Class A common stock and Old PubCo Class B common stock, respectively.
5. Merger Sub 2 merges with and into Opco with Opco surviving (the “Second Merger”).2
6. As a result of the Second Merger, all common units of Opco, other than those held by Old PubCo, will convert into an equal number of shares of New PubCo Class A common stock. | |
| 2 | Pursuant to the Opco Limited Liability Company Agreement, the Second Merger will require the consent of a majority interest of the members. |
|
7. Immediately following the Second Merger, all holders of Opco common units, other than Old PubCo, shall surrender their respective shares of New PubCo Class B common stock for cancellation pursuant to a Stock Surrender Agreement executed prior to Closing.
8. Following the Second Merger, any hook stock resulting from the First Merger or the Second Merger (i.e., New PubCo stock held by Old PubCo and Opco) will be surrendered to New PubCo for no consideration and subsequently retired.
9. Upon completion of the Reorganization, Old PubCo will be directly owned by New PubCo and Opco will be directly owned by Old PubCo and New PubCo and there will be a single class of stock of New PubCo outstanding.
10. Following the Reorganization, the public stockholders will own the same portion of the equity of New PubCo that they owned in Old PubCo prior to the Reorganization.
Old PubCo and Opco intend for the transaction to be a non-taxable reorganization pursuant to Section 351 of the Internal Revenue Code. | ||
| Stock Surrender Agreement | Prior to Closing, the Amneal Legacy Group members will each execute the Stock Surrender Agreement irrevocably agreeing to surrender to New PubCo the shares of New PubCo Class B common stock received by them in connection with the First Merger immediately following the Second Merger, and New PubCo will, upon such surrender, retire the shares. | |
| Applicability of DGCL Section 251(g) | The First Merger will meet the requirements of Section 251(g) of the DGCL and will be accomplished without a vote of the stockholders of Old PubCo. | |
| Consideration | The Amneal Legacy Group will not receive cash consideration in the Reorganization. | |
|
Tax Receivable Agreement |
The Reorganization shall not result in an acceleration of the Tax Receivable Agreement dated as of May 4, 2018, by and among Old PubCo, Opco and the Amneal Legacy Group (the “TRA”). The terms of the TRA will be |
| amended to provide that the percentage of the applicable tax savings the Amneal Legacy Group will be entitled to thereunder is decreased from 85% to 75%. The terms of the TRA will otherwise remain unchanged. | ||
|
Tax Distributions |
Tax distributions under Section 4.01(b) of the Third Amended and Restated Limited Liability Company Agreement of Opco dated as of May 4, 2018, by and among Opco and its Members (as defined therein) (the “Opco LLCA”) will continue for all periods prior to the Closing, with a final tax distribution to occur on or immediately prior to the date of the Closing for the calendar quarter (or partial calendar quarter) in which the Closing occurs. | |
|
Corporate Governance |
New PubCo will retain the same management and board composition as Old PubCo.
The charter and bylaws of New PubCo shall have provisions identical to the current charter and bylaws of Old PubCo, including all of the rights of the Amneal Legacy Group contained therein, consistent with Section 251(g) of the DGCL.
New PubCo will assume all of the rights and obligations of Old PubCo under the Second Amended and Restated Stockholders Agreement dated December 16, 2017 and as amended as of August 2, 2019, by and among Old PubCo, Opco, AP Class D Member, LLC, AP Class E Member, LLC and AH PPU Management, LLC (the “Stockholders Agreement”). The Stockholders Agreement will be amended as necessary to account for the Reorganization. | |
|
Reorganization Documentation |
Prior to Closing, the Parties will amend any applicable governance, voting, stockholders or similar agreements to which Old PubCo, Opco or any of the Amneal Legacy Group members are party (including, but not limited to, the Opco LLCA, TRA and Stockholders Agreement) in order to (i) effect the Reorganization and (ii) maintain the effectiveness of such agreements following the Reorganization.
Other than as set forth in this Term Sheet and to achieve the purposes set forth above, the terms of such agreements shall remain unchanged. |
| The Parties agree to cooperate to effect, or cause to effect, as applicable, any other documentation necessary for the Reorganization. | ||
| Tax Opinion | Prior to the Closing and for the mutual benefit of New PubCo and the Amneal Legacy Group, New PubCo will deliver to the Amneal Legacy Group a written legal opinion, in form previously provided to the Amneal Legacy Group (or a substantially similar form), from a nationally recognized law firm (including, for the avoidance of doubt, Simpson Thacher & Bartlett LLP) to the effect that the Reorganization will qualify as a transaction described in Section 351 of the Internal Revenue Code; provided, however, that each member of the Amneal Legacy Group who would own 5% or more of the stock of New PubCo following the Reorganization shall have delivered a customary representation letter in the form previously provided to the Amneal Legacy Group (or a substantially similar form). | |
| Costs and Expenses | Each Party shall bear its own costs and expenses incurred in connection with the Reorganization, including attorneys’ fees and accountants’ fees. | |
| Termination | This Term Sheet may be terminated (i) by mutual consent of Old PubCo and Opco or (ii) by either such Party in the event that any governmental authority shall have issued an order, decree, directive or ruling or shall have taken any other official action, orally or in writing, enjoining, restraining or otherwise prohibiting the transactions contemplated by the definitive agreements or denying approval of any application or notice for approval to consummate the transactions that is necessary for the consummation of the transactions, and such order, decree, ruling or other action has become final and non-appealable. | |
| Binding Effect; Governing Law | Each Party agrees that this Term Sheet is intended to be legally valid and binding in all respects and create formal legal obligations on each Party to it, the consideration for which is the mutual covenants and undertakings set out herein.
This Term Sheet shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to any conflict of law provisions. Any dispute, disagreement, controversy or claim arising out of or relating to this Term Sheet or the breach hereof shall be |
| subject to the jurisdiction of the Chancery Courts of Delaware (or, if such court does not have jurisdiction, the Superior Court of the State of Delaware, or, if such other court does not have jurisdiction, the United States District Court for the District of Delaware), and each Party waives any arguments around forum non-conveniens or that such courts do not have jurisdiction over such Party. Each of the Parties irrevocably waives any and all rights to trial by jury in any action between the parties arising out of or relating to this Term Sheet. | ||
| Cooperation | The Parties agree to reasonably cooperate with each other and use reasonable best efforts to take such actions as reasonably necessary or reasonably requested by any other Party (to the extent consistent with the terms set forth herein) in order to effect the Reorganization as soon as reasonably practicable (the “Closing Date”). | |
| Closing | Subject to and in accordance with the terms set forth in this Term Sheet, the Closing shall take place on the Closing Date, unless another time or date is agreed to in writing by the Parties. |
****
| Accepted and agreed this 16th day of October 2023: | ||
| AMNEAL PHARMACEUTICALS, INC. | ||
| By: | /s/ Kevin Buchi | |
| Name: | Kevin Buchi | |
| Title: | Director and Chairman of the Conflicts Committee of the Board of Directors of Amneal Pharmaceuticals, Inc. | |
| AMNEAL PHARMACEUTICALS LLC | ||
| By: | /s/ Anastasios Konidaris | |
| Name: | Anastasios Konidaris | |
| Title: | Executive Vice President, Chief Financial Officer | |
| THE AMNEAL GROUP REPRESENTATIVE | ||
| By: | /s/ Padmesh Patel | |
| Name: | Padmesh Patel | |
| Title: | Amneal Group Representative | |
[Signature Page to Term Sheet]
Document and Entity Information |
Oct. 16, 2023 |
|---|---|
| Cover [Abstract] | |
| Amendment Flag | false |
| Entity Central Index Key | 0001723128 |
| Document Type | 8-K |
| Document Period End Date | Oct. 16, 2023 |
| Entity Registrant Name | AMNEAL PHARMACEUTICALS, INC. |
| Entity Incorporation State Country Code | DE |
| Entity File Number | 001-38485 |
| Entity Tax Identification Number | 32-0546926 |
| Entity Address, Address Line One | 400 Crossing Blvd |
| Entity Address, City or Town | Bridgewater |
| Entity Address, State or Province | NJ |
| Entity Address, Postal Zip Code | 08807 |
| City Area Code | (908) |
| Local Phone Number | 947-3120 |
| Written Communications | false |
| Soliciting Material | false |
| Pre Commencement Tender Offer | false |
| Pre Commencement Issuer Tender Offer | false |
| Security 12b Title | Class A Common Stock, par value $0.01 per share |
| Trading Symbol | AMRX |
| Security Exchange Name | NYSE |
| Entity Emerging Growth Company | false |
-8?20$3;8T.P6BP^0"X9
M9K>]9!:G
L!-_VZTL-&^J30/%1AF(RSQG=W=W4:'COXL6Y@CP8TJD$KH:67]IL$,OQ:
MZ':W19U:^_O[#7J:-IUKF;V@W6QN-?!QGQN1-N=C/2DTY^-0\*#NJ3%2OM5J
MMG8R*HQ<1 .,VVK\^OGLVAN),:_)T,0\]+(W)+%>2L]^ YZF#:51V^W6[@KB
M78NLPV19VQ:T#6&JXMSYO'B]K.FC5CST R4'O,8U 5'>E=KMFOMG=P@
M-5"&PD"I #$P,2YH=&U02P4& 4 !0! 0 ASP
end