Teligent, Inc. – Designates Successful Bidders in Respect of Three Asset Groupings, with January 13/14 Auctions Netting $23mn Over Aggregated Stalking Horse Bids

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January 14, 2022 – Further to a December 15th bidding procedures order [Docket No. 290] and an auction occurring on January 13th and 14th, the Debtors have notified the Court as to the designation of successful bidders for each of their three major asset groupings, ie their New Jersey manufacturing facility, their Canadian assets and a portfolio of FDA new drug applications (or "ANDAs") [Docket Nos. 373, 374 and 375, respectively] and each described further below.

The Debtors designated:

  1. Stalking horse Leiters, Inc. as the successful bidder (purchase price $27.0mn, cash element and APA at Docket No. 383) in respect of the pharmaceutical manufacturing and laboratory facility located in Buena, New Jersey, and certain specific service and maintenance agreements and other related assets (the “Facility”) [NB, there were no further qualified bids and hence no back-up bidder], 
  2. Hikma Canada Limited as the successful bidder (purchase price $45.75mn, cash element and APA at Docket No. 384) in respect of the assets located in Canada (the “Canadian Assets”), with SteriMax Inc as the backup bidder and 
  3. Stalking horse PAI Holdings, LLC as the successful bidder (purchase price $14.42mn and APA at Docket No. 385) in respect of the new drug applications and abbreviated new drug applications for generic drug products that the Debtors have submitted for approval to the Food & Drug Administration (the “U.S. Marketing Authorizations”), with Nivagen Pharmaceuticals, Inc. as the backup bidder.

The Hikma Canada bid in respect of the Canadian Assets advanced on the $30.0mn stalking horse bid of ultimate back-up bidder SteriMax Inc and the winning PAI Holdings bid in respect of the U.S. Marketing Authorizations advanced on PAI's $7.0mn opening stalking horse bid.

A sale hearing in respect of the three proposed sales is scheduled for January 18, 2022.

Key Terms of Leiters APA:

  • Seller: Teligent, Inc. and its affiliated Debtors (“Seller”)
  • Buyer: Leiters, Inc.
  • Assets: the Debtors' Buena, New Jersey, facility
  • Purchase Price:  $27.0mn, plus the assumption of Assumed Liabilities.
  • Bid Protections: Aggregate amount of $810k; $250k bidding increment

Key Terms of Hikma Canada Limited APA:

  • Seller: Teligent, Inc. and its affiliated Debtors (“Seller”)
  • Buyer: Hikma Canada Limited
  • Assets: The Debtors' Canadian Assets
  • Purchase Price: (i) an amount in cash equal to $45,750,000 (the “Cash Amount”); plus (ii) the amount, if any, by which the Closing Date Working Capital is greater than the Target Working Capital; minus (iii) the amount, if any, by which the Closing Date Working Capital is less than the Target Working Capital; plus (iv) the assumption of Assumed Liabilities.
  • Bid Protections: $900k break-up fee and $500k expense reimbursement; $250k bidding increment

Key Terms of PAI APA:

  • Seller: Teligent, Inc. and its affiliated Debtors (“Seller”)
  • Buyer: PAI Holdings, LLC
  • Assets: the Debtors' U.S. Marketing Authorizations
  • Purchase Price: (i) an amount in cash equal to $14,420,000 (the “Cash Amount”); plus (ii) the assumption of Assumed Liabilities 
  • Bid Protections: $210k break-up fee and $120k expense reimbursement; $250k bidding increment.

Marketing Efforts and Auction

The Debtors' investment banker filed a declaration in support of the assets sales [Docket No. 380] which provides the following marketing background and insight on how the auction progressed: "During the Chapter 11 Cases, the Debtors and their advisors continued to actively engaged with prospective buyers, and ultimately received twenty (23) indications of interest in seven (7) different bid configurations. After reviewing all of the initial bid proposals, the Debtors, in consultation with their advisors and Board of Directors, determined that the offers from the Stalking Horse Bidders were the most attractive, in view of the consideration offered thereby and in comparison to other bids. The Debtors conducted good faith, arms’ length negotiations with the stalking horse bidders, reaching agreement on stalking horse purchase agreements for three of their asset categories, which are detailed further below.

After conducting a detailed analysis of the Debtors’ businesses and assets, and considering a number of factors, including geographical and operational variances in the nature of the Debtors’ businesses, the Debtors, in consultation with their advisors and in order to maximize the value of their estates, decided to divide their assets into three asset categories. Subject to the terms of the Bidding Procedures, interested parties were entitled to bid on the Assets (i) in individual lots, (ii) as a collective whole, or (iii) in any combination. Set forth below are certain categories of specific Assets that comprise, together with all other Assets related to each, the Assets that were subject to sale in accordance with the Bidding Procedures (collectively, the 'Asset Categories').

The first asset category, referred to as the 'Facility,' comprises the Debtors’ pharmaceutical manufacturing and laboratory facility located in Buena, New Jersey and certain specific service and maintenance agreements and other related assets. On November 24, 2021, the Debtors and Leiters, Inc. ('Leiters') entered into that certain Purchase and Sale Agreement (the 'Facility Stalking Horse Agreement') pursuant to which Leiters agreed to purchase the Facility.

The second asset category, referred to as the 'Canadian Assets,' comprises substantially all of the Debtors’ assets located in Canada. On November 24, 2021, the Debtors and SteriMax Inc. ('SteriMax') entered into that certain Purchase and Sale Agreement (the 'Canadian Assets Stalking Horse Agreement'), pursuant to which SteriMax agreed to purchase the Canadian Assets.

The third asset category, referred to as the 'U.S. Marketing Authorizations,' comprises the abbreviated new drug applications for generic drug products that the Debtors have submitted for approval to the Food & Drug Administration. On November 23, 2021, the Debtors and PAI Holdings, LLC ('PAI,' and together with Leiters and SteriMax, the 'Stalking Horse Bidders') entered into that certain Purchase and Sale Agreement (the 'U.S. Marketing Authorizations Stalking Horse Agreement,' and together with the Facility Stalking Horse Agreement and the Canadian Assets Stalking Horse Agreement, the 'Stalking Horse Agreements'), pursuant to which PAI agreed to purchase the U.S. Marketing Authorizations.

On or prior to the Bid Deadline and in addition to the bids from the Stalking Horse Purchasers, the Debtors received bids from (i) Hikma Canada Limited ('Hikma') and Blue Wolf Capital Partners, LLC ('Blue Wolf') (or their respective affiliates), for the purchase of the Canadian Assets, and (ii) Chartwell Pharmaceuticals, LLC, Rising Pharma Holdings, LLC, and Nivagen Pharmaceuticals (or their respective affiliates) for the purchase of the ANDAs. All of the foregoing bids were deemed Qualified Bids for their respective asset categories.

Despite the substantial efforts of the Debtors and their advisors, the Debtors did not receive any competing bids for the Facility prior to the Bid Deadline and, accordingly, Leiters was deemed the Successful Bidder for such asset category at the Auction.

The Debtors commenced the Auction on January 13, 2022 at 10:00 a.m. (ET), and it concluded at approximately 2:00 p.m. (ET) on January 14, 2022. I believe that the Auction was conducted in accordance with the terms of the Bidding Procedures Order and in a reasonable and appropriate manner intended to maximize the value of the Debtors’ assets. I believe that all Qualified Bidders were provided with a fair, reasonable, and equal opportunity to submit competing bids for the Assets.

The Auction included multiple rounds of bidding for the ANDAs and the Canadian Business, respectively, with thirty-five (35) overbids being placed for the ANDAs and eighteen (18) placed for the Canadian Business. At the conclusion of the Auction, the following entities were deemed the Winning Bidders and the Back-Up Bidders (as applicable) for the following Asset categories:

More Background

The Debtors’ requested bidding procedure motion [Docket No. 209] reads, “The Debtors determined to undertake a sale of substantially all of their assets after careful consideration of all potential alternatives. Of the available restructuring paths, the Sale was and remains the most efficient means to obtaining the greatest value for the Assets and distributing that value to the Debtors’ stakeholders in accordance with their legal priorities. The Debtors already have floor-setting Stalking Horse Bids and now seek to continue the marketing process with the added benefits of a Court-approved section 363 sale process. After this market check, the Debtors, their creditors, and other parties in interest can be confident that the Debtors will have obtained the highest and best value for the Assets. And, importantly, beyond the consideration the Debtors and their estates will receive in the Sale, the Successful Bidders likely will be assuming liabilities that otherwise would dilute any recoveries that may be available to unsecured creditors.

The Debtors believe that the Bidding Procedures will establish sound parameters by which the proffered sale price of the Assets under the Stalking Horse Agreements may be tested at the Auction, as well as the ensuing Sale Hearing, and evaluated as described herein. Such procedures will increase the likelihood that the Debtors will receive the greatest possible consideration for the Assets because they will ensure a competitive and fair bidding process. The Bidding Procedures will also allow the Debtors to undertake the Auction process in an orderly fashion, which the Debtors believe is essential to maintaining and maximizing the value of its estate.

Thus, the proposed Bidding Procedures are reasonable, appropriate, and within the Debtors’ sound business judgment under the circumstances because they will serve to maximize the value that the Debtors will obtain on account of the Sale of the Assets.”

About the Debtors

According to the Debtors: “Teligent is a specialty generic pharmaceutical company. Our mission is to be a leading player in the specialty generic prescription drug market.”

Corporate Structure

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