Vivus, Inc. and its affiliated debtors filed with the U.S. Bankruptcy Court for the District of Delaware a Joint Prepackaged Chapter 11 Plan of Reorganization and a Disclosure Statement on July 7, 2020.
As a result of extensive arm’s-length negotiations, on May 31, 2020, the Debtors executed a restructuring support agreement (as amended and restated on July 6, 2020 and as may be subsequently amended, restated or supplement the “Restructuring Support Agreement”) with IEH, as the Supporting Noteholder. The Restructuring Support Agreement provides that the Supporting Noteholder will, among other things, agree to vote its Class 3 Claims (Convertible Note Claims) and Class 4 Claims (Secured Notes Claims) in favor of the Plan.
Under the terms of the Restructuring Support Agreement, the Supporting Noteholder has agreed to support a consensual restructuring of the Debtors’ existing debt obligations in chapter 11 through the Plan. The Restructuring will leave the Debtors’ business intact and will substantially deleverage the Debtors’ capital structure. The Restructuring Transactions provided in the Plan will enable the Debtors to reduce their balance sheet liabilities from approximately $235.43 million in funded debt, not including interest, fees, and other expenses incurred in connection with the Convertible Notes Indenture, to approximately $90,000,000 in funded debt, if the Exit Facility is fully drawn down, which represents an approximate 62% reduction of debt on the Effective Date relative to the Petition Date.
The deleveraging will enhance the Debtors’ long-term growth prospects and competitive position and will provide the Debtors with excess capital to invest in and grow their business. The Restructuring will allow the Debtors to emerge from the Chapter 11 Cases as a stronger business enterprise, better positioned to deliver value to the Debtors’ customers and to continue to serve as a reliable partner to their existing vendors and suppliers going forward. The Supporting Noteholder, as the holder of 100% of the Debtors’ funded debt, has played an important and constructive role in formulating the Restructuring and actively participated in the negotiation of the Plan.
With respect to the Supporting Unsecured Noteholder’s Convertible Note Claims, under the Plan, in full and final satisfaction, settlement, release, and discharge of, and in exchange for each Allowed Convertible Note Claims, on the Effective Date (i) the holder of the Convertible Note will receive 100% of the equity in Reorganized VIVUS (the “Reorganized VIVUS Equity”) and any fees and expenses (including the Supporting Unsecured Noteholder’s and Convertible Note Trustee’s reasonable attorneys’ and other advisor fees and expenses) will be paid in accordance with Section 2.5(b) of the Plan.
With respect to the Supporting Secured Noteholder’s Secured Notes Claims, under the Plan, in full and final satisfaction, settlement, release, and discharge of, and in exchange for each Allowed Secured Notes Claims, on the Effective Date (i) the $61,351,000 principal amount of the Secured Notes Claims shall at the option of the Debtors (and the Supporting Noteholder) or the Reorganized Debtors, as applicable be (a) paid in full in Cash from the proceeds of the Exit Facility or (b) exchanged dollar for dollar for new debt under the Exit Facility and (ii) all unpaid prepayment premium, the applicable payment date fee, and accrued interest (collectively, in an amount not less than $3,173,636), plus interest, reasonable and documented fees, expenses, costs, and other charges of the Secured Notes Trustee and the Supporting Secured Noteholder arising and payable under that certain Secured Notes Indenture will be paid in full in cash by the Debtors on the Effective Date from the proceeds of the Exit Facility.
In addition to supporting the Plan, IEH has consented to the Debtors’ use of cash collateral, which IEH holds a security interest in as the Secured Noteholder. On the Petition Date, the Debtors will file a motion seeking interim and final orders authorizing their use of cash collateral and granting certain rights and protections to the Secured Notes Trustee and the Supporting Secured Noteholder. IEH will provide the Reorganized Debtors with a new term loan facility in an aggregate principal amount of $90,000,000 in accordance with the Exit Facility Documents.
Class 5 General Unsecured Claims will recover 100 percent. In exchange for each Allowed General Unsecured Claim, the Debtors shall continue to pay or dispute each Allowed General Unsecured Claim in the ordinary course of business after the Effective Date as if the Chapter 11 Cases had never been commenced.
All Class 7 interests shall be canceled and holders of Interests shall receive no distributions under the Plan on account of such Interests; provided, however, that holders of Existing Stock as of the Existing Stock Record Date may participate in the Existing Stock Settlement.
A full-text copy of the Disclosure Statement dated July 7, 2020, is available at https://tinyurl.com/y7885eou from PacerMonitor at no charge.
Proposed Counsel for Debtors:
WEIL, GOTSHAL & MANGES LLP
Matthew S. Barr, Esq.
Gabriel A. Morgan, Esq. (pro hac vice pending)
Natasha S. Hwangpo, Esq. (pro hac vice pending)
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 310-8000
Facsimile: (212) 310-8007
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RICHARDS, LAYTON & FINGER, P.A.
Mark D. Collins, Esq.
Zachary I. Shapiro, Esq.
One Rodney Square
920 N. King Street
Wilmington, Delaware 19801
Telephone: (302) 651-7700
Facsimile: (302) 651-7701
About Vivus Inc
Vivus Inc. (NASDAQ: VVUS) is a biopharmaceutical company committed to the development and commercialization of innovative therapies that focus on advancing treatments for patients with serious unmet medical needs. It was incorporated in 1991 in California and reincorporated in 1996 in Delaware. As of the petition date, Vivus is a publicly traded company with its shares listed on the Nasdaq Global Market LLC under the ticker symbol “VVUS.” Vivus maintains its headquarters in Campbell, Calif. Visit https://www.vivus.com for more information.
Vivus and three of its affiliates sought protection under Chapter 11 of the Bankruptcy Code (Bankr. D. Del. Case No. 20-11779) on July 7, 2020. The petitions were signed by Mark Oki, chief financial officer. Judge Laurie Selber Silverstein presides over the cases.
As of May 31, 2020, Debtors reported total assets of $213,884,000 and total liabilities of $281,669,000.
The Debtors tapped Weil Gotshal & Manges LP as their general bankruptcy counsel, Richards, Layton & Finger P.A. as local counsel, Ernst & Young as financial advisor, and Piper Sandler Companies as investment banker. Stretto is the claims and noticing agent.