Akorn discloses 'cleansing materials,' says in talks with lenders

As previously disclosed, on February 12, Akorn, certain of its subsidiaries and certain of its lenders entered into a Second Amendment to Standstill Agreement and Third Amendment to Credit Agreement with its lenders and Wilmington Savings Fund Society, FSB, as administrative agent. Among other things, the amended standstill agreement provides that the company will market and conduct a sale process for substantially all of its assets in accordance with certain milestones. As of March 28, there were no bids in the sale process sufficient to pay all obligations under the term loan agreement and an immediate event of default under the term loan agreement occurred. As a result, as of April 1, the alternative milestones for the sale process set forth in the amended standstill agreement apply, which provide that, among other things, the company shall commence cases under Chapter 11 of title 11 of the U.S. Code on or before May 1, 2020. In connection with the sale process, the company has been engaged in discussions with certain lenders and has entered into confidentiality agreements with such lenders. Pursuant to the terms of the NDAs, the company agreed to publicly disclose certain information regarding the company provided to the NDA Parties pursuant to the NDAs, otherwise known as the "Cleansing Materials," upon the occurrence of certain events. The cleansing materials contain certain preliminary financial results as of and for the three months ended March 31, 2020 and information related to potential effects of the COVID-19 pandemic, the company's product pipeline, manufacturing, regulatory compliance and research and development, as well as certain projections and forecasts including the cash flow projections. In the cleansing materials slides, the company states that Q1 preliminary results are estimated to be in line with the company's forecasts, with preliminary revenue of $191M and adjusted operating income of $40M.