MannKind Restructures Near-Term Debt Obligations
October 23 2017 - 8:00AM
New 5.75% Convertible Senior
Subordinated Exchange Notes due 2021 and Common Stock to be
Issued in Exchange for Existing Convertible Senior
Subordinated Exchange Notes due 2018
MannKind Corporation (NASDAQ:MNKD) (TASE:MNKD) today announced the
restructuring of certain of its outstanding debt obligations.
- Exchanged senior convertible notes in the amount of
approximately $27.7 million due August 2018 for senior convertible
notes in the amount of approximately $23.7 million due October 2021
and 973,236 shares of common stock.
- Extended the maturity of $10 million of the Deerfield facility
from October 31, 2017 to January 15, 2018 and allowed for such
principal to be converted into common stock.
- Allowed for certain additional outstanding principal under the
Deerfield facility to be converted into common stock.
MannKind’s Chief Executive Officer, Michael
Castagna, commented, “These transactions, in combination with the
recent registered direct offering, are expected to enable us to
execute our near-term business plan.”
New 5.75% Convertible Senior
Subordinated Exchange Notes due 2021
MannKind entered into an exchange agreement with
the holders of its outstanding 5.75% Convertible Senior
Subordinated Exchange Notes due 2018 (the “2018 notes”), pursuant
to which the Company agreed to issue to such holders in exchange
for all of the outstanding 2018 notes (i) $23,670,000 aggregate
principal amount of new 5.75% Convertible Senior Subordinated
Exchange Notes due 2021 (the “2021 notes”) and (ii) an aggregate of
973,236 shares of its common stock, par value $0.01 per share (the
“Exchange Shares”).
The 2021 notes will be the Company’s general,
unsecured, senior obligations, except that the 2021 notes will be
subordinated in right of payment to the outstanding notes issued
pursuant to the Company’s Facility Agreement, dated July 1, 2013,
as amended (the “Facility Agreement”), with Deerfield Private
Design Fund II, L.P. and Deerfield Private Design International II,
L.P. (collectively “Deerfield”). The 2021 notes will rank equally
in right of payment with the Company’s other unsecured senior debt.
The 2021 notes will bear interest at the rate of 5.75% per year on
the principal amount, payable semiannually in arrears in cash or,
at the option of the Company if certain conditions are met, in
shares of the Company’s common stock (the “Interest Shares”), on
February 15 and August 15 of each year, beginning February 15,
2018, with interest accruing from August 15, 2017. The 2021
notes will mature on October 23, 2021.
The 2021 notes will be convertible, at the
option of the holder, at any time on or prior to the close of
business on the business day immediately preceding the stated
maturity date, into shares of the Company’s common stock at a
conversion rate of 194.1748 shares per $1,000 principal amount of
2021 notes, which is equal to a conversion price of approximately
$5.15 per share. The conversion rate will be subject to adjustment
under certain customary circumstances to be described in an
indenture governing the 2021 notes (the “Indenture”).
The Company may elect at its option to cause all
or any portion of the 2021 Notes to be mandatorily converted in
whole or in part at any time prior to the close of business on the
business day immediately preceding the maturity date, if the last
reported sale price of its common stock equals or exceeds 120% of
the conversion price then in effect for at least 10 trading days in
any 20 trading day period, ending within five business days prior
to the date of the mandatory conversion notice.
Fourth Amendment to Facility Agreement
with Deerfield
MannKind also entered into an exchange and
fourth amendment to the Facility Agreement, pursuant to which $10.0
million in principal previously due on October 31, 2017 under the
9.75% Senior Convertible Notes will be deferred to January 15, 2018
(the “October Payment”), conditioned upon, among other things,
MannKind depositing $10.0 million with an escrow agent, which is
subject to reduction as the October Payment is satisfied through
conversions to equity.
Specifically, the Facility Agreement was amended
and restated to provide that Deerfield may convert principal due
from time to time into an aggregate of up to 4,000,000 shares of
MannKind’s common stock. The conversion price will be the greater
of (i) the average of the volume weighted average price per share
of the common stock for the three trading day period immediately
preceding the date of any election by Deerfield to convert
principal amounts and (ii) $3.25 per share, subject to adjustment
under certain circumstances described in the notes. Any conversions
of principal by Deerfield under the Facility Agreement will be
applied first to reduce the October Payment, and after the October
Payment has been satisfied, to reduce other principal payments due
under the notes.
ABOUT MANNKIND
CORPORATIONMannKind Corporation (NASDAQ:MNKD) (TASE:MNKD)
focuses on the development and commercialization of inhaled
therapeutic products for patients with diseases such as diabetes
and pulmonary arterial hypertension. MannKind is currently
commercializing Afrezza® (insulin human) inhalation powder, the
Company's first FDA-approved product and the only inhaled
rapid-acting mealtime insulin in the United States, where it is
available by prescription from pharmacies nationwide. MannKind is
headquartered in Westlake Village, California, and has a
state-of-the art manufacturing facility in Danbury, Connecticut.
The Company also employs field sales and medical representatives
across the U.S. For further information, visit
www.mannkindcorp.com.
Forward-Looking StatementsThis
press release contains forward-looking statements that involve
risks and uncertainties, including statements regarding the
completion of the debt and exchange transactions and expectations
regarding MannKind’s ability to execute its near-term business
plan. Words such as "believes", "anticipates", "plans",
"expects", "intend", "will", "goal", "potential" and similar
expressions are intended to identify forward-looking statements.
These forward-looking statements are based upon MannKind's current
expectations. Actual results and the timing of events could
differ materially from those anticipated in such forward-looking
statements as a result of these risks and uncertainties, which
include risks associated with MannKind’s ability to satisfy closing
conditions, whether MannKind’s cash resources will be sufficient to
operate its business and satisfy its debt repayment obligations and
the risks detailed in MannKind's filings with the Securities and
Exchange Commission, including the Annual Report on Form 10-K for
the year ended December 31, 2016 and subsequent periodic reports on
Form 10-Q and current reports on Form 8-K. You are cautioned
not to place undue reliance on these forward-looking statements,
which speak only as of the date of this press release. All
forward-looking statements are qualified in their entirety by this
cautionary statement, and MannKind undertakes no obligation to
revise or update any forward-looking statements to reflect events
or circumstances after the date of this press release.
Company Contact:Rose
AlinayaSVP, Investor Relations818-661-5000ir@mannkindcorp.com
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