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Synergy Pharmaceuticals Files Chapter 11, Proposes Sale to Stalking Horse Bausch Health

December 12, 2018, 07:06 AM
Filed Under: Pharmaceuticals

Synergy Pharmaceuticals Inc., a biopharmaceutical company focused on the development and commercialization of novel gastrointestinal (GI) therapies, announced an agreement with Bausch Health Companies Inc., through which Bausch Health would acquire substantially all of Synergy's assets, including all rights to TRULANCE® (plecanatide), dolcanatide and related intellectual property, for approximately $200 million in cash, subject to certain adjustments at closing, plus the assumption of certain liabilities related to the assets to be acquired. The sale is subject to a competitive process and the Company's receipt of higher and better offers.

To facilitate the sale and address its debt obligations, Synergy initiated voluntary proceedings under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York. The Company fully intends to operate its business as usual while it works to complete the sale through the Chapter 11 process.

Synergy has entered into a binding term sheet with its existing first lien lenders for debtor-in-possession (DIP) financing in an aggregate principal amount equal to $155 million, comprised of $110 million of roll up pre-petition loan obligations and $45 million of new money loans to support operations during the Chapter 11 and sale process. According to Court Records, CRG Servicing LLC served as administrative agfent for the financing, which combined with existing cash on its balance sheet and normal operating cash flows, will allow Synergy to operate its business as usual and help fund its ongoing financial commitments while it works to complete the sale. The Company also has filed customary motions with the Court seeking authorization to continue employee wages and benefit programs, honor future vendor payments and maintain customer programs in the normal course in addition to certain other relief.

"We have worked diligently to serve our patients, health care professionals and other stakeholders by bringing TRULANCE® to market and developing other GI therapies to address previously unmet needs. Unfortunately, we have now reached a point where our financial challenges are preventing us from taking this important work to the next level," said Troy Hamilton, Chief Executive Officer of Synergy Pharmaceuticals Inc. "We are pleased to reach this agreement with Bausch Health and to move forward with the court-supervised auction process. We are confident that this process will result in a strong new owner that has the necessary funding and commercialization capabilities to continue providing TRULANCE to the patients and providers who have come to rely on this treatment and will allow us to maximize value for all stakeholders. We thank our employees for their continued hard work, dedication and commitment to serving our health care professionals and their patients."

The proposed sale to Bausch Health is expected to be conducted through a supervised sale process under Section 363 of the Bankruptcy Code and will be subject to Court-approved bidding procedures, receipt of higher and better offers at auction and approval of the Court.  As part of the sale through the Chapter 11 process, Synergy and its advisors will evaluate competing bids that may be submitted in order to ensure the Company receives the highest and best offer for its assets. The agreement with Bausch Health comprises the initial stalking horse bid in the Court-supervised auction process. Synergy aims to complete this process by the end of the first quarter of 2019. The agreement will be filed with the Securities and Exchange Commission.

Synergy is advised in this transaction by Skadden, Arps, Slate, Meagher & Flom LLP, Sheppard, Mullin, Richter & Hampton LLP, Centerview Partners and FTI Consulting.


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