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Court File No. CV-17-584836-00CL
ONTARIO SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
IN THE MATTER OF AN APPLICATION UNDER SECTION 192 OF THE CANADA BUSINESS CORPORATIONS ACT, R.S.C. 1985, c. C-44, AS AMENDED, AND RULES 14.05(2) AND 14.05(3) OF THE RULES OF CIVIL PROCEDURE AND IN THE MATTER OF A PROPOSED ARRANGEMENT OF CONCORDIA INTERNATIONAL CORP. AND CONCORDIA HEALTHCARE (CANADA) LIMITED AND INVOLVING CONCORDIA LABORATORIES INC., S.A.R.L., CONCORDIA PHARMACEUTICALS INC., S.A.R.L., CONCORDIA INVESTMENTS (JERSEY) LIMITED, CONCORDIA FINANCING (JERSEY) LIMITED, AMDIPHARM HOLDINGS S.A.R.L., AMDIPHARM AG, AMDIPHARM B.V., AMDIPHARM LIMITED, AMDIPHARM MERCURY HOLDCO UK LIMITED, AMDIPHARM MERCURY UK LTD., CONCORDIA HOLDINGS (JERSEY) LIMITED, AMDIPHARM MERCURY INTERNATIONAL LIMITED, CONCORDIA INVESTMENT HOLDINGS (UK) LIMITED, MERCURY PHARMA GROUP LIMITED, CONCORDIA INTERNATIONAL RX (UK) LIMITED, ABCUR AB, MERCURY PHARMACEUTICALS LIMITED, FOCUS PHARMA HOLDINGS LIMITED, FOCUS PHARMACEUTICALS LIMITED, MERCURY PHARMA (GENERICS) LIMITED, MERCURY PHARMACEUTICALS (IRELAND) LIMITED, AND MERCURY PHARMA INTERNATIONAL LIMITED
CONCORDIA INTERNATIONAL CORP. AND CONCORDIA HEALTHCARE (CANADA) LIMITED
Applicants
MOTION RECORD VOLUME 1 OF 2
(Motion for Preliminary Interim Order returnable October 20, 2017)
GOODMANS LLP Barristers & Solicitors Bay Adelaide Centre – West Tower 333 Bay Street, Suite 3400 Toronto, Canada M5H 2S7
Robert J. Chadwick LSUC#: 35165K [email protected] Brendan O’Neill LSUC#: 43331J [email protected] Caroline Descours LSUC#: 58251A [email protected] Ryan Baulke LSUC#: 66189O [email protected] Tel: 416.979.2211 Fax: 416.979.1234 Lawyers for the Applicants
INDEX
INDEX
Tab Document Page No.
1 Notice of Motion dated October 20, 2017 0001
2 Notice of Application dated October 20, 2017 0008
3 Draft Preliminary Interim Order 0016
4 Affidavit of David Price, sworn October 19, 2017 0026
A Organizational Chart of the Concordia Group 0070
B Secured Term Loan Credit Agreement 0072
C Secured Notes Indenture 0384
D Extended Unsecured Bridge Loan Agreement 0830
E Equity Unsecured Bridge Loan Agreement 0993
F 7.00% Unsecured Notes Indenture 1151
G Press Release dated October 16, 2017 1320
H 9.50% Unsecured Notes Indenture 1324
I DELIVER Management Presentation and Fact Sheet 1500
J Consolidated audited financial statements of Concordia International Corp. for the year ended December 31, 2016
1517
Tab Document Page No.
K Consolidated unaudited financial statements of Concordia International Corp. for the three and six months ended June 30, 2017
1583
L Copy of the letter from the CBCA Director dated October 19, 2017 1626
TAB 1
Court File No. CV-17-584836-OOCL
ONTARIO SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
IN THE MATTER OF AN APPLICATION UNDER SECTION 192 OF THE CANADA BUSINESS CORPORATIONS ACT, R.S.C. 1985, c. C-44, AS AMENDED, AND RULES 14.05(2) AND 14.05(3) OF THE RULES OF CIVIL PROCEDURE
AND IN THE MATTER OF A PROPOSED ARRANGEMENT OF CONCORDIA INTERNATIONAL CORP. AND CONCORDIA HEALTHCARE (CANADA) LIMITED AND INVOLVING CONCORDIA LABORATORIES INC., S.A.R.L., CONCORDIA PHARMACEUTICALS INC., S.A.R.L., CONCORDIA INVESTMENTS (JERSEY) LIMITED, CONCORDIA FINANCING (JERSEY) LIMITED, AMDIPHARM HOLDINGS S.A.R.L., AMDIPHARM AG, AMDIPHARM B.V., AMDIPHARM LIMITED, AMDIPHARM MERCURY HOLDCO UK LIMITED, AMDIPHARM MERCURY UK LTD., CONCORDIA HOLDINGS (JERSEY) LIMITED, AMDIPHARM MERCURY INTERNATIONAL LIMITED, CONCORDIA INVESTMENT HOLDINGS (UK) LIMITED, MERCURY PHARMA GROUP LIMITED, CONCORDIA INTERNATIONAL RX (UK) LIMITED, ABCUR AB, MERCURY PHARMACEUTICALS LIMITED, FOCUS PHARMA HOLDINGS LIMITED, FOCUS PHARMACEUTICALS LIMITED, MERCURY PHARMA (GENERICS) LIMITED, MERCURY PHARMACEUTICALS (IRELAND) LIMITED, AND MERCURY PHARMA INTERNATIONAL LIMITED
CONCORDIA INTERNATIONAL CORP. AND CONCORDIA HEALTHCARE (CANADA) LIMITED
Applicants
NOTICE OF MOTION (Motion for Preliminary Interim Order returnable October 20, 2017)
The Applicants, Concordia International Corp. (“CIC”) and Concordia Healthcare
(Canada) Limited (“CHCL”, and together with CIC, the “Applicants”), will make a motion to a
Judge presiding over the Commercial List on October 20, 2017 at 8:00 a.m. or as soon after that
time as the motion can be heard, at 330 University Avenue, Toronto, Ontario.
PROPOSED METHOD OF HEARING: The motion is to be heard orally.
0001
- 2 -
THE MOTION IS FOR:
(a) a preliminary interim order (the “Preliminary Interim Order”) pursuant to
section 192(4) of the Canada Business Corporations Act, R.S.C. 1985, c. C-44, as
amended (the “CBCA”), including a stay of proceedings, substantially in the
same form of the draft Preliminary Interim Order attached as Tab “3” to the
Motion Record; and
(b) such further and other relief as this Court may deem just.
THE GROUNDS FOR THE MOTION ARE:
(a) CHCL is a corporation governed by the CBCA;
(b) CIC is a corporation incorporated under the Business Corporations Act, R.S.O.
1990, c-B.16, as amended, and it is expected that in connection with the
Arrangement (as defined below), CIC will be continued under the CBCA in
advance of the Applicants returning to the Court for a final order approving the
Arrangement;
(c) the Subsidiary Guarantors (as defined below) are corporations established under
the laws of the jurisdictions indicated in Schedule “A” to this Notice of Motion;
(d) the Preliminary Interim Order is in connection with a proposed arrangement (the
“Arrangement”) with respect to the Applicants and involving the direct and
indirect subsidiaries listed on Schedule “A” to this Notice of Motion (the
“Subsidiary Guarantors”, and together with the Applicants, the “Company”),
through which the Company expects to, among other things (i) significantly
reduce the Company’s outstanding indebtedness and annual interest costs, (ii)
improve its capital structure and (iii) put the Company on a strong financial
footing to execute on its long-term growth strategy moving forward;
(e) it is expected that, in connection with the Arrangement, CIC and CHCL will
amalgamate;
0002
- 3 -
(f) the Preliminary Interim Order includes preliminary relief that is necessary to
assist in advancing and finalizing the proposed Arrangement, including a stay of
proceedings;
(g) section 192(4) of the CBCA provides that this Court may make such Orders as it
considers appropriate in connection with a proposed arrangement;
(h) the relief sought in the Preliminary Interim Order is within the scope of
subsection 192 of the CBCA and will enable the Applicants to continue to
effectively and efficiently advance and finalize the terms of the proposed
Arrangement, and the definitive documentation for the proposed Arrangement,
including a plan of arrangement, and to return before the Court on a date to be
scheduled for an interim Order in respect of the Arrangement, the calling of
meetings of the applicable affected stakeholders and other related relief;
(i) rules 1.04, 1.05, 3.02, 14.05, 17.02, 37, 38 and 39 of the Rules of Civil Procedure;
(j) section 192 of the CBCA; and
(k) such further and other grounds as counsel may advise and this Court may permit.
THE FOLLOWING DOCUMENTARY EVIDENCE will be used at the hearing of the
Motion:
(a) the within Notice of Application;
(b) the affidavit of David Price sworn October 19, 2017 and the exhibits attached
thereto; and
(c) such further and other material as counsel may advise and this Court may permit.
0003
- 4 -
October 20, 2017 GOODMANS LLP Barristers & Solicitors 333 Bay Street, Suite 3400 Toronto, Canada M5H 2S7
Robert J. Chadwick (LSUC#: 35165K)
[email protected] Brendan O’Neill (LSUC#: 43331J)
[email protected] Caroline Descours (LSUC#: 58251A)
[email protected] Ryan Baulke (LSUC#: 66189O)
Lawyers for the Applicants
TO: THE DIRECTOR UNDER THE CANADA BUSINESS CORPORATIONS ACT Compliance & Policy Directorate Corporations Canada, Industry Canada 9th Floor, Jean Edmonds Tower South 365 Laurier Avenue West Ottawa, ON, K1A 0C8
AND TO: GOLDMAN SACHS BANK USA, Administrative Agent and Collateral Agent for the Secured Term Loans, Administrative Agent for the Equity Unsecured Bridge Loan, Administrative Agent for the Extended Unsecured Bridge Loan 200 West Street, 16th Floor New York, NY, 10282 Attention: SBD Operations Email: [email protected]
AND TO: U.S. BANK NATIONAL ASSOCIATION, Trustee and Collateral Agent for the Secured Notes, Trustee for the 9.50% Unsecured Notes, Trustee for the 7.00% Unsecured Notes 13737 Noel Road, Suite 800 Dallas, Texas, 75240 For the Secured Notes and 9.50% Unsecured Notes Attention: Damien Daley Email: [email protected] For the 7.00% Unsecured Notes Attention: Global Corporate Trust Services Fax: (972) 581-1660
0004
- 5 -
AND TO: OSLER, HOSKIN & HARCOURT LLP, Advisors to an ad hoc committee of secured debtholders 100 King Street West, Suite 6200 Toronto, Ontario, M5X 1B8 Attention: Marc Wasserman / Martino Calvaruso Email: [email protected] / [email protected]
AND TO: BENNETT JONES LLP, Advisors to an ad hoc committee of unsecured debtholders 3400 One First Canadian Place P.O. Box 130 Toronto, Ontario, M5X 1A4 Attention: Kevin Zych / Sean Zweig Email: [email protected] / [email protected]
AND TO: DAVIS POLK & WARDWELL, Counsel to Goldman Sachs Bank USA in its capacity as Administrative Agent for the Secured Term Loans, Equity Unsecured Bridge Loan and Extended Unsecured Bridge Loan 450 Lexington Avenue New York, NY, 10017 Attention: Damian Schaible Email: [email protected]
0005
SCHEDULE “A”
SUBSIDIARY GUARANTORS
1. Concordia Laboratories Inc., S.a.R.L. – Luxembourg
2. Concordia Pharmaceuticals Inc., S.a.R.L. – Luxembourg
3. Concordia Investments (Jersey) Limited – Jersey
4. Concordia Financing (Jersey) Limited – Jersey
5. Amdipharm Holdings S.a.R.L. – Luxembourg
6. Amdipharm AG – Switzerland
7. Amdipharm B.V. – Netherlands
8. Amdipharm Limited – Ireland
9. Amdipharm Mercury Holdco UK Limited – United Kingdom
10. Amdipharm Mercury UK Ltd. – United Kingdom
11. Concordia Holdings (Jersey) Limited – Jersey
12. Amdipharm Mercury International Limited – Jersey
13. Concordia Investment Holdings (UK) Limited – United Kingdom
14. Mercury Pharma Group Limited – United Kingdom
15. Concordia International Rx (UK) Limited – United Kingdom
16. Abcur AB – Sweden
17. Mercury Pharmaceuticals Limited – United Kingdom
18. Focus Pharma Holdings Limited – United Kingdom
19. Focus Pharmaceuticals Limited – United Kingdom
20. Mercury Pharma (Generics) Limited– United Kingdom
21. Mercury Pharmaceuticals (Ireland) Limited – Ireland
22. Mercury Pharma International Limited – Ireland
0006
IN THE MATTER OF AN APPLICATION UNDER SECTION 192 OF THE CANADA BUSINESS CORPORATIONS ACT, R.S.C. 1985, C. C-44, AS AMENDED, AND RULES 14.05(2) AND 14.05(3) OF THE RULES OF CIVIL PROCEDURE
AND IN THE MATTER OF A PROPOSED ARRANGEMENT OF CONCORDIA INTERNATIONAL CORP. AND CONCORDIA HEALTHCARE (CANADA) LIMITED
Applicants
Court File No. CV-17-584836-OOCL
ONTARIO SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
Proceeding commenced at Toronto
NOTICE OF MOTION
(Motion returnable October 20, 2017) (Preliminary Interim Order)
GOODMANS LLP Barristers & Solicitors 333 Bay Street, Suite 3400 Toronto, Canada M5H 2S7 Robert J. Chadwick LSUC#: 35165K [email protected] Brendan O’Neill LSUC#: 43331J [email protected] Caroline Descours LSUC#: 58251A [email protected] Ryan Baulke LSUC#: 66189O [email protected] Tel: (416) 979-2211 Fax: (416) 979-1234 Lawyers for the Applicants
0007
TAB 2
ONTARIO
SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
Court File No.LIZ —
CCCL.
IN THE MATTER OF AN APPLICATION UNDER SECTION 192 OFTHE CANADA BUSINESS CORPORATIONS ACT, R.S.C. 1985, c. C-44, ASAMENDED, AND RULES 14.05(2) AND 14.05(3) OF THE RULES OFCIVIL PROCEDURE
AND IN THE MATTER OF A PROPOSED ARRANGEMENT OFCONCORDIA INTERNATIONAL CORP. AND CONCORDIAHEALTHCARE (CANADA) LIMITED AND INVOLVING CONCORDIALABORATORIES INC., S.A.R.L., CONCORDIA PHARMACEUTICALSINC., S.A.R.L., CONCORDIA INVESTMENTS (JERSEY) LIMITED,CONCORDIA FINANCING (JERSEY) LIMITED, AMDIPHARMHOLDINGS S.A.R.L., AMDIPHARM AG, AMDIPHARM B.V.,AMDIPHARM LIMITED, AMDIPHARM MERCURY HOLDCO UKLIMITED, AMDIPHARM MERCURY UK LTD., CONCORDIAHOLDINGS (JERSEY) LIMITED, AMDIPHARM MERCURYINTERNATIONAL LIMITED, CONCORDIA INVESTMENT HOLDINGS(UK) LIMITED, MERCURY PHARMA GROUP LIMITED, CONCORDIAINTERNATIONAL RX (UK) LIMITED, ABCUR AB, MERCURYPHARMACEUTICALS LIMITED, FOCUS PHARMA HOLDINGSLIMITED, FOCUS PHARMACEUTICALS LIMITED, MERCURYPHARMA (GENERICS) LIMITED, MERCURY PHARMACEUTICALS(IRELAND) LIMITED, AND MERCURY PHARMA INTERNATIONALLIMITED
CONCORDIA INTERNATIONAL CORP. AND CONCORDIA HEALTHCARE(CANADA) LIMITED
NOTICE OF APPLICATION
TO THE RESPONDENTS:
Applicants
A LEGAL PROCEEDING HAS BEEN COMMENCED by the Applicants. The claimmade by the Applicants appears on the following page.
THIS APPLICATION will come on for hearing before a Judge presiding over theCommercial List on dates to be set by the Court, at 330 University Avenue, Toronto, Ontario, on
0008
notice to the parties listed below and any other party that properly submits a notice of appearancein accordance with the following paragraph.
IF YOU WISH TO OPPOSE THIS APPLICATION, to receive notice of any step inthe application or to be served with any documents in the application, you or an Ontario lawyeracting for you must forthwith prepare a notice of appearance in Form 38A prescribed by theRules of Civil Procedure, serve it on the Applicants' lawyer or, where the Applicants do not havea lawyer, serve it on the Applicants, and file it, with proof of service, in this court office, and youor your lawyer must appear at the hearing.
IF YOU WISH TO PRESENT AFFIDAVIT OR OTHER DOCUMENTARYEVIDENCE TO THE COURT OR TO EXAMINE OR CROSS-EXAMINE WITNESSESON THE APPLICATION, you or your lawyer must, in addition to serving your notice ofappearance, serve a copy of the evidence on the Applicants' lawyer or, where the Applicants donot have a lawyer, serve it on the Applicants, and file it, with proof of service, in the court officewhere the application is to be heard as soon as possible, but not later than 2 p.m. on the daybefore the hearing, or as otherwise ordered by the Court.
IF YOU FAIL TO APPEAR AT THE HEARING, JUDGMENT MAY BE GIVENIN YOUR ABSENCE AND WITHOUT FURTHER NOTICE TO YOU. IF YOU WISHTO OPPOSE THIS APPLICATION BUT ARE UNABLE TO PAY LEGAL FEES,LEGAL AID MAY BE AVAILABLE TO YOU BY CONTACTING A LOCAL LEGALAID OFFICE.
Date October 20, 2017 Issued by
stray
Nateleha Browns. nr
Address of 330 niversity Avenuecourt office Toronto, Ont. io M5G 1E7
TO: THE DIRECTOR UNDER THE CANADA BUSINESSCORPORATIONS ACTCompliance & Policy DirectorateCorporations Canada, Industry Canada9th Floor, Jean Edmonds Tower South365 Laurier Avenue WestOttawa, ON, K1A 008
0009
AND TO: GOLDMAN SACHS BANK USA, Administrative Agent and CollateralAgent for the Secured Term Loans, Administrative Agent for the EquityUnsecured Bridge Loan, Administrative Agent for the Extended UnsecuredBridge Loan200 West Street, 16th FloorNew York, NY, 10282Attention: SBD OperationsEmail: [email protected]
AND TO: U.S. BANK NATIONAL ASSOCIATION, Trustee and Collateral Agent forthe Secured Notes, Trustee for the 9.50% Unsecured Notes, Trustee for the7.00% Unsecured Notes13737 Noel Road, Suite 800Dallas, Texas, 75240For the Secured Notes and 9.50% Unsecured Notes Attention: Damien DaleyEmail: [email protected] the 7.00% Unsecured Notes Attention: Global Corporate Trust ServicesFax: (972) 581-1660
AND TO: OSLER, HOSKIN & HARCOURT LLP, Advisors to an ad hoc committee ofsecured debtholders100 King Street West, Suite 6200Toronto, Ontario, M5X 1B8Attention: Marc Wasserman / Martino CalvarusoEmail: [email protected] / [email protected]
AND TO: BENNETT JONES LLP, Advisors to an ad hoc committee of unsecureddebtholders3400 One First Canadian PlaceP.O. Box 130Toronto, Ontario, M5X 1A4Attention: Kevin Zych / Sean ZweigEmail: [email protected] / [email protected]
AND TO: DAVIS POLK & WARDWELL, Counsel to Goldman Sachs Bank USA in itscapacity as Administrative Agent for the Secured Term Loans, EquityUnsecured Bridge Loan and Extended Unsecured Bridge Loan450 Lexington AvenueNew York, NY, 10017Attention: Damian SchaibleEmail: [email protected]
0010
APPLICATION
1. THE APPLICANTS MAKE AN APPLICATION FOR:
a) a preliminary interim order (the "Preliminary Interim Order") pursuant to
section 192(4) of the Canada Business Corporations Act, R.S.C. 1985, c. C-44, as
amended (the "CBCA") in connection with a proposed arrangement (the
"Arrangement") with respect to Concordia International Corp. ("CIC") and
Concordia Healthcare (Canada) Limited ("CHCL" and, together with CIC, the
"Applicants") and involving the direct and indirect subsidiaries listed on
Schedule "A" to this Notice of Application (the "Subsidiary Guarantors", and
together with the Applicants, the "Company"), including a stay of proceedings;
b) an interim order pursuant to section 192(4) of the CBCA to address the calling,
holding and conducting of meetings of the affected stakeholders to consider the
Arrangement and other related relief (an "Interim Order");
c) a final order approving the Arrangement pursuant to sections 192(3) and 192(4) of
the CBCA (a "Final Order"); and
d) such further and other relief as this Court may deem just.
2. THE GROUNDS FOR THE APPLICATION ARE:
a) CHCL is a corporation governed by the CBCA;
b) CIC is a corporation incorporated under the Business Corporations Act, R.S.O.
1990, c-B.16, as amended, and it is expected that in connection with the
Arrangement, CIC will be continued under the CBCA in advance of the
Applicants returning to the Court for a final order approving the Arrangement;
c) it is expected that, in connection with the Arrangement, CIC and CHCL will
amalgamate;
d) the Subsidiary Guarantors are corporations established under the laws of the
jurisdictions indicated in Schedule "A" to this Notice of Application;
0011
e) the Applicants wish to effect fundamental changes in the nature of an arrangement
under the provisions of the CBCA;
f) all statutory requirements under section 192 of the CBCA have been or will have
been satisfied by the hearing of the within Application;
it is not practicable for the Applicants to effect the Arrangement under any other
provision of the CBCA;
h) the Application has been put forward in good faith and is in the best interests of
the Applicants and the stakeholders of the Applicants;
i) the requested provisions of the Preliminary Interim Order relating to a stay of
proceedings are within the scope of subsection 192(4) of the CBCA and are
reasonable in the circumstances;
i) the directions set forth in the Preliminary Interim Order (if granted), the Interim
Order (if granted), and the requisite approval of the affected stakeholders will be
followed and obtained by the hearing of the within Application;
this Notice of Application and the Preliminary Interim Order (if granted) will be
sent to all of those listed in this Notice of Application;
1) certain of the debtholders and shareholders of the Company are resident outside of
Ontario and will be served pursuant to the terms of any Preliminary Interim Order
or other order for advice and directions granted by this Court and rules 17.02(n)
and 17.02(o) of the Rules of Civil Procedure;
m) rules 1.04, 1.05, 3.02, 14.05, 17.02, 37, 38 and 39 of the Rules of Civil Procedure;
n) section 192 of the CBCA; and
o) such further and other grounds as counsel may advise and this Court may permit.
0012
3. THE FOLLOWING DOCUMENTARY EVIDENCE will be used at the hearing of the
Application:
a) the affidavit of David Price sworn October 19, 2017, and the exhibits thereto;
b) any further affidavits to be sworn on behalf of the Applicants, with exhibits
thereto, in connection with a motion for an Interim Order and a motion for a Final
Order;
c) such further and other material as counsel may advise and this Court may permit.
October 20, 2017 GOODMANS LLPBarristers & Solicitors333 Bay Street, Suite 3400Toronto, Canada M5H 2S7
Robert J. Chadwick (LSUC#: 35165K)[email protected]
Brendan O'Neill (LSUC#: 43331J)[email protected]
Caroline Descours (LSUC#: 58251A)cdescours@goodmans ca
Ryan Baulke (LSUC#: 661890)[email protected]
Tel: (416) 979-2211Fax: (416) 979-1234
Lawyers for the Applicants
0013
SCHEDULE "A"
SUBSIDIARY GUARANTORS
1. Concordia Laboratories Inc., S.a.R.L. — Luxembourg
2. Concordia Pharmaceuticals Inc., S.a.R.L. — Luxembourg
3. Concordia Investments (Jersey) Limited — Jersey
4. Concordia Financing (Jersey) Limited — Jersey
5. Amdipharm Holdings S.a.R.L. — Luxembourg
6. Amdipharm AG — Switzerland
7. Amdipharm B.V. — Netherlands
8. Amdipharm Limited — Ireland
9. Amdipharm Mercury Holdco UK Limited — United Kingdom
10. Amdipharm Mercury UK Ltd. — United Kingdom
11. Concordia Holdings (Jersey) Limited — Jersey
12. Amdipharm Mercury International Limited — Jersey
13. Concordia Investment Holdings (UK) Limited — United Kingdom
14. Mercury Pharma Group Limited — United Kingdom
15. Concordia International Rx (UK) Limited — United Kingdom
16. Abcur AB — Sweden
17. Mercury Pharmaceuticals Limited — United Kingdom
18. Focus Pharma Holdings Limited — United Kingdom
19. Focus Pharmaceuticals Limited — United Kingdom
20. Mercury Pharma (Generics) Limited— United Kingdom
21. Mercury Pharmaceuticals (Ireland) Limited — Ireland
22. Mercury Pharma International Limited — Ireland
0014
IN THE MATTER OF AN APPLICATION UNDER SECTION 192 OF THE CANADABUSINESS CORPORATIONS ACT, R.S.C. 1985, C. C-44, AS AMENDED, AND RULES14.05(2) AND 14.05(3) OF THE RULES OF CIVIL PROCEDURE
AND IN THE MATTER OF A PROPOSED ARRANGEMENT OF CONCORDIAINTERNATIONAL CORP. AND CONCORDIA HEALTHCARE (CANADA) LIMITED
Applicants
Court File No.
C\H
ONTARIOSUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
Proceeding commenced at Toronto
NOTICE OF APPLICATION
GOODMANS LLPBarristers & Solicitors333 Bay Street, Suite 3400Toronto, Canada M5H 2S7
Robert J. Chadwick LSUC#: [email protected] O'Neill LSUC#: [email protected] Descours LSUC#: [email protected] Baulke LSUC#: [email protected]
Tel: (416) 979-2211Fax: (416) 979-1234
Lawyers for the Applicants
0015
TAB 3
DR
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Court File No. CV-17-584836-00CL
ONTARIO SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
THE HONOURABLE REGIONAL
SENIOR JUSTICE MORAWETZ
) ) )
FRIDAY, THE 20TH
DAY OF OCTOBER, 2017
IN THE MATTER OF AN APPLICATION UNDER SECTION 192 OF THE CANADA BUSINESS CORPORATIONS ACT, R.S.C. 1985, C. C-44, AS AMENDED, AND RULES 14.05(2) AND 14.05(3) OF THE RULES OF CIVIL PROCEDURE
AND IN THE MATTER OF A PROPOSED ARRANGEMENT OF CONCORDIA INTERNATIONAL CORP. AND CONCORDIA HEALTHCARE (CANADA) LIMITED AND INVOLVING CONCORDIA LABORATORIES INC., S.A.R.L., CONCORDIA PHARMACEUTICALS INC., S.A.R.L., CONCORDIA INVESTMENTS (JERSEY) LIMITED, CONCORDIA FINANCING (JERSEY) LIMITED, AMDIPHARM HOLDINGS S.A.R.L., AMDIPHARM AG, AMDIPHARM B.V., AMDIPHARM LIMITED, AMDIPHARM MERCURY HOLDCO UK LIMITED, AMDIPHARM MERCURY UK LTD., CONCORDIA HOLDINGS (JERSEY) LIMITED, AMDIPHARM MERCURY INTERNATIONAL LIMITED, CONCORDIA INVESTMENT HOLDINGS (UK) LIMITED, MERCURY PHARMA GROUP LIMITED, CONCORDIA INTERNATIONAL RX (UK) LIMITED, ABCUR AB, MERCURY PHARMACEUTICALS LIMITED, FOCUS PHARMA HOLDINGS LIMITED, FOCUS PHARMACEUTICALS LIMITED, MERCURY PHARMA (GENERICS) LIMITED, MERCURY PHARMACEUTICALS (IRELAND) LIMITED, AND MERCURY PHARMA INTERNATIONAL LIMITED
PRELIMINARY INTERIM ORDER
THIS MOTION made by Concordia International Corp. (“CIC”) and Concordia
Healthcare (Canada) Limited (together with CIC, the “Applicants”), for a preliminary interim
order in connection with an arrangement (the “Arrangement”) pursuant to section 192 of the
Canada Business Corporations Act, R.S.C. 1985, c. C-44, as amended, (the “CBCA”),
0016
DR
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: 1
including a stay of proceedings, was heard this day at 330 University Avenue, Toronto,
Ontario.
ON READING the Notice of Motion, the Notice of Application issued on October 20,
2017, and the affidavit of David Price sworn October 19, 2017, together with the exhibits
attached thereto, and on hearing the submissions of counsel for the Applicants.
Definitions
1. THIS COURT ORDERS that for the purposes of this Order capitalized terms used
herein but not defined have the meanings set forth in Schedule A.
Stay of Proceedings
2. THIS COURT ORDERS that, subject to paragraph 3 of this Order, from 12:01 a.m.
(Toronto time) on the date of this Order and until further order of the Court, no right, remedy or
proceeding, including, without limitation, any right to terminate, demand, accelerate, set off,
amend, declare in default or take any other action under or in connection with any loan, note,
commitment, contract or other agreement, at law or under contract, may be exercised,
commenced or proceeded with by: (i) any of the Secured Debtholders; (ii) any of the
Unsecured Debtholders; (iii) any administrative agent, collateral agent, indenture trustee or
similar person in respect of the Secured Debt and/or Unsecured Debt; or (iv) any person that is
party to or a beneficiary of any other loan, note, commitment, contract or other agreement with
one or more of the Concordia Entities, against or in respect of any of the Concordia Entities, or
any of the present or future property, assets, rights or undertakings of any of the Concordia
Entities, of any nature in any location, whether held directly or indirectly by any of the
Concordia Entities, by reason or as a result of:
0017
DR
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: 1
a) any of the Applicants having made an application to this Court pursuant to
Section 192 of the CBCA;
b) any of the Applicants or Subsidiary Guarantors being a party to or involved in
these proceedings or the Arrangement;
c) any of the Applicants or Subsidiary Guarantors taking any step contemplated by
or related to these proceedings or the Arrangement;
d) the non-payment of principal, interest and any other amounts due and payable in
respect of any of the Unsecured Debt, or the expiry of any applicable grace
periods in respect of any of the Unsecured Debt; or
e) any default or cross-default under any of the Secured Debt (except in respect of
any non-payment of scheduled payments of interest (at non-default rates) or
amortization, as applicable, under the Secured Debt, for certainty, without
giving effect to any acceleration under the Secured Debt) or the Unsecured
Debt,
in each case except with the prior consent of the Applicants or leave of this Court.
3. THIS COURT ORDERS that, notwithstanding any other provision of this Order, no
person shall be prohibited from taking any actions on the same basis as is permitted under
section 34(8) of the CCAA.
0018
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: 1
Notice of Proceedings
4. THIS COURT ORDERS that, subject to further order of this Court, the only persons
entitled to notice of and to appear and be heard at subsequent motions within these proceedings
shall be:
a) the Applicants and the other Concordia Entities and their counsel;
b) counsel to each of the Secured Debtholder Committee and the Unsecured
Debtholder Committee;
c) the Agent and the Trustee and their respective legal counsel;
d) the CBCA Director; and
e) any interested person who has served and filed a Notice of Appearance in
accordance with this Order and the Rules of Civil Procedures.
5. THIS COURT ORDERS that any Notice of Appearance served in these proceedings
shall be served on the solicitors for the Applicants as soon as reasonably practicable at the
following address:
Goodmans LLP 333 Bay Street, Suite 3400 Toronto, ON M5H 2S7
Attention: Robert J. Chadwick, Brendan O’Neill and Caroline Descours Email: [email protected] / [email protected] /[email protected]
6. THIS COURT ORDERS that the requirement for service of the Notice of Motion is
hereby dispensed with and that this Motion is properly returnable today.
0019
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Comeback Hearing
7. THIS COURT ORDERS that any interested party that wishes to amend or vary this
Order shall be entitled bring a motion before this Court on seven business days’ notice to the
Applicants and any other party or parties likely to be affected by the order to be sought by such
interested party.
E-Service Protocol
8. THIS COURT ORDERS that the E-Service Guide of the Commercial List (the
“Guide”) is approved and adopted by reference herein and, in this proceeding, the service of
documents made in accordance with the Guide (which can be found on the Commercial List
website at http://www.ontariocourts.ca/scj/practice/practice-directions/toronto/eservice-
commercial/) shall be valid and effective service. Subject to Rule 17.05 this Order shall
constitute an order for substituted service pursuant to Rule 16.04 of the Rules of Civil
Procedure. Subject to Rule 3.01(d) of the Rules of Civil Procedure and paragraph 13 of the
Guide, service of documents in accordance with the Guide will be effective on transmission.
9. THIS COURT ORDERS that if the service or distribution of documents in accordance
with the Guide is not practicable, the Applicants are at liberty to serve or distribute this Order,
any other materials and orders in these proceedings, any notices or other correspondence, by
forwarding true copies thereof by prepaid ordinary mail, courier, personal delivery or facsimile
transmission to interested parties at their respective addresses as last shown on the records of
the Applicants and that any such service or distribution by courier, personal delivery or
facsimile transmission shall be deemed to be received on the next business day following the
date of forwarding thereof, or if sent by ordinary mail, on the third business day after mailing.
0020
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10. THIS COURT ORDERS that the Applicants and their respective counsel are at liberty
to serve or distribute this Order, any other materials and orders as may be reasonably required
in these proceedings, including any notices, or other correspondence, by forwarding true copies
thereof by electronic message to interested parties and their advisors, as applicable. For greater
certainty, any such distribution or service shall be deemed to be in satisfaction of a legal or
juridical obligation, and notice requirements within the meaning of clause 3(c) of the Electronic
Commerce Protection Regulations, Reg. 81000-2-175 (SOR/DORS).
Aid and Recognition
11. THIS COURT SEEKS AND REQUESTS the aid and recognition of any court or any
judicial, regulatory or administrative body in any province of Canada and any judicial,
regulatory or administrative tribunal or other court constituted pursuant to the Parliament of
Canada or the legislature of any province and any court or any judicial, regulatory or
administrative body of the United States or other country to act in aid of and to assist this Court
in carrying out the terms of this Order and any other orders entered in connection with these
proceedings.
12. THIS COURT ORDERS that, notwithstanding anything to the contrary herein, neither
the terms of this Order nor the Applicants being a party to or the Subsidiary Guarantors being
involved in these proceedings shall prejudice or preclude the Applicants and any of the
Subsidiary Guarantors from commencing cases under the CCAA, chapter 11 of the United
States Bankruptcy Code, 11. U.S.C. §§ 101 et seq., or their equivalents in other jurisdictions.
0021
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Schedule A
Additional Defined Terms
a) “Agent” means Goldman Sachs Bank USA, in its capacity as Administrative
Agent and/or Collateral Agent under any of the Secured Debt or Unsecured
Debt, as applicable, and any permitted successors and assigns;
b) “CCAA” means the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-
36, as amended;
c) “Concordia Entities” means, collectively, CIC and all of its direct and indirect
subsidiaries;
d) “Secured Debt” means, collectively, the debt outstanding under: (i) the Credit
and Guaranty Agreement dated October 21, 2015 by and among, inter alia,
Concordia International Corp. (f/k/a Concordia Healthcare Corp.), the
guarantors party thereto, Goldman Sachs Bank USA, as Administrative Agent
and Collateral Agent, and the lenders party thereto; (ii) the Indenture for 9.000%
First Lien Senior Secured Notes Due 2022 dated October 13, 2016 by and
among Concordia International Corp., the guarantors party thereto, and U.S.
Bank National Association, as Trustee and as Collateral Agent; (iii) the
International Swaps and Derivatives Association 2002 Master Agreement dated
as of August 15, 2016, between Goldman Sachs International and Concordia
Investments (Jersey) Limited (the “ISDA”); (iv) the Swap Confirmation entered
into as of August 17, 2016 and November 8, 2016 between Goldman Sachs
0022
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International and Concordia Investments (Jersey) Limited in accordance with
the ISDA; and (v) all related documentation, including, without limitation, all
guarantee and security documentation, related to the foregoing;
e) “Secured Debtholder Committee” means the ad hoc committee of debtholders
comprised of certain holders of Secured Debt represented by the Secured
Debtholder Committee Representatives;
f) “Secured Debtholder Committee Representatives” means Osler, Hoskin &
Harcourt LLP and White & Case LLP;
g) “Secured Debtholders” means, collectively, the holders of the Secured Debt;
h) “Subsidiary Guarantors” means, collectively, all of the Concordia Entities that
are guarantors in respect of the Secured Debt and/or Unsecured Debt;
i) “Trustee” means U.S. Bank National Association, in its capacity as Trustee
under any of the Secured Debt or Unsecured Debt, as applicable, and any
permitted successors and assigns;
j) “Unsecured Debt” means, collectively, the debt outstanding under: (i) the
Indenture for 7.000% Senior Unsecured Notes Due 2023 dated April 21, 2015
by and among Concordia International Corp. (f/k/a Concordia Healthcare
Corp.), the guarantors party thereto, and U.S. Bank National Association, as
Trustee; (ii) the Indenture for 9.500% Senior Unsecured Notes Due 2022 dated
October 21, 2015 by and among Concordia International Corp. (f/k/a Concordia
Healthcare Corp.), the guarantors party thereto, and U.S. Bank National
0023
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Association, as Trustee; (iii) the Two Year Equity Bridge Credit and Guaranty
Agreement dated October 21, 2015 by and among, inter alia, Concordia
International Corp. (f/k/a Concordia Healthcare Corp.), the guarantors party
thereto, Goldman Sachs Bank USA, as Administrative Agent, and the lenders
from time to time party thereto; (iv) the Extended Equity Bridge Credit and
Guaranty Agreement dated October 21, 2015 by and among, inter alia,
Concordia International Corp. (f/k/a Concordia Healthcare Corp.), the
guarantors party thereto, Goldman Sachs Bank USA, as Administrative Agent,
and the lenders party thereto; and (v) all related documentation, including,
without limitation, all guarantee documentation, related to the foregoing;
k) “Unsecured Debtholder Committee” means the ad hoc committee of
debtholders comprised of certain holders of Unsecured Debt represented by the
Unsecured Debtholder Committee Representatives;
l) “Unsecured Debtholder Committee Representatives” means Bennett Jones
LLP, Paul, Weiss, Rifkind, Wharton & Garrison LLP, and Ashurst LLP; and
m) “Unsecured Debtholders” means, collectively, the holders of the Unsecured
Debt.
0024
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GOODMANS\6743270
IN THE MATTER OF AN APPLICATION UNDER SECTION 192 OF THE CANADA BUSINESS CORPORATIONS ACT, R.S.C. 1985, C. C-44, AS AMENDED, AND RULES 14.05(2) AND 14.05(3) OF THE RULES OF CIVIL PROCEDURE AND IN THE MATTER OF A PROPOSED ARRANGEMENT OF CONCORDIA INTERNATIONAL CORP. AND CONCORDIA HEALTHCARE (CANADA) LIMITED
Court File No: CV-17-584836-00CL
ONTARIO SUPERIOR COURT OF JUSTICE-
COMMERCIAL LIST Proceeding commenced at Toronto
PRELIMINARY INTERIM ORDER
GOODMANS LLP Barristers & Solicitors 333 Bay Street, Suite 3400 Toronto, Canada M5H 2S7 Robert J. Chadwick LSUC#: 35165K [email protected] Brendan O’Neill LSUC#: 43331J [email protected] Caroline Descours LSUC#: 58251A [email protected] Ryan Baulke LSUC#: 66189O [email protected] Tel: (416) 979-2211 Fax: (416) 979-1234 Lawyers for the Applicants
0025
TAB 4
Court File No. CV-17-584836-00CL
ONTARIO SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
IN THE MATTER OF AN APPLICATION UNDER SECTION 192 OF THE CANADA BUSINESS CORPORATIONS ACT, R.S.C. 1985, c. C-44, AS AMENDED, AND RULES 14.05(2) AND 14.05(3) OF THE RULES OF CIVIL PROCEDURE
AND IN THE MATTER OF A PROPOSED ARRANGEMENT OF CONCORDIA INTERNATIONAL CORP. AND CONCORDIA HEALTHCARE (CANADA) LIMITED AND INVOLVING CONCORDIA LABORATORIES INC., S.A.R.L., CONCORDIA PHARMACEUTICALS INC., S.A.R.L., CONCORDIA INVESTMENTS (JERSEY) LIMITED, CONCORDIA FINANCING (JERSEY) LIMITED, AMDIPHARM HOLDINGS S.A.R.L., AMDIPHARM AG, AMDIPHARM B.V., AMDIPHARM LIMITED, AMDIPHARM MERCURY HOLDCO UK LIMITED, AMDIPHARM MERCURY UK LTD., CONCORDIA HOLDINGS (JERSEY) LIMITED, AMDIPHARM MERCURY INTERNATIONAL LIMITED, CONCORDIA INVESTMENT HOLDINGS (UK) LIMITED, MERCURY PHARMA GROUP LIMITED, CONCORDIA INTERNATIONAL RX (UK) LIMITED, ABCUR AB, MERCURY PHARMACEUTICALS LIMITED, FOCUS PHARMA HOLDINGS LIMITED, FOCUS PHARMACEUTICALS LIMITED, MERCURY PHARMA (GENERICS) LIMITED, MERCURY PHARMACEUTICALS (IRELAND) LIMITED, AND MERCURY PHARMA INTERNATIONAL LIMITED
CONCORDIA INTERNATIONAL CORP. AND CONCORDIA HEALTHCARE (CANADA) LIMITED
Applicants
AFFIDAVIT OF DAVID PRICE (sworn October 19, 2017)
0026
( i )
TABLE OF CONTENTS
I. OVERVIEW .......................................................................................................................3
II. BACKGROUND REGARDING THE COMPANY .......................................................7
(a) Corporate Structure ..................................................................................................7
(b) History of the Company ...........................................................................................8
(c) Overview of the Company’s Business ...................................................................11
(d) Business Challenges...............................................................................................17
(e) Capital Structure ....................................................................................................21
(f) Equity Incentive Plans ...........................................................................................30
III. BACKGROUND TO THE ARRANGEMENT AND THE RECAPITALIZATION TRANSACTION ..........................................................................................................................32
(a) The 2016 Strategic Review ....................................................................................32
(b) 2017 Long-Term Growth Strategy.........................................................................32
(c) Development of the Recapitalization Transaction .................................................35
IV. REASONS FOR PROCEEDING BY WAY OF A CBCA PLAN OF ARRANGEMENT .......................................................................................................................38
(a) CHCL is Solvent and, Following the Completion of the Recapitalization Transaction, the Applicants will be Solvent ......................................................................38
(b) It is Not Practicable to Proceed in Another Manner ..............................................39
V. THE PRELIMINARY INTERIM ORDER...................................................................39
(a) The Stay of Proceedings ........................................................................................39
(b) Notice to CBCA Director.......................................................................................41
VI. CONCLUSION ................................................................................................................41
0027
Court File No. ___________________
ONTARIO SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST
IN THE MATTER OF AN APPLICATION UNDER SECTION 192 OF THE CANADA BUSINESS CORPORATIONS ACT, R.S.C. 1985, c. C-44, AS AMENDED, AND RULES 14.05(2) AND 14.05(3) OF THE RULES OF CIVIL PROCEDURE
AND IN THE MATTER OF A PROPOSED ARRANGEMENT OF CONCORDIA INTERNATIONAL CORP. AND CONCORDIA HEALTHCARE (CANADA) LIMITED AND INVOLVING CONCORDIA LABORATORIES INC., S.A.R.L., CONCORDIA PHARMACEUTICALS INC., S.A.R.L., CONCORDIA INVESTMENTS (JERSEY) LIMITED, CONCORDIA FINANCING (JERSEY) LIMITED, AMDIPHARM HOLDINGS S.A.R.L., AMDIPHARM AG, AMDIPHARM B.V., AMDIPHARM LIMITED, AMDIPHARM MERCURY HOLDCO UK LIMITED, AMDIPHARM MERCURY UK LTD., CONCORDIA HOLDINGS (JERSEY) LIMITED, AMDIPHARM MERCURY INTERNATIONAL LIMITED, CONCORDIA INVESTMENT HOLDINGS (UK) LIMITED, MERCURY PHARMA GROUP LIMITED, CONCORDIA INTERNATIONAL RX (UK) LIMITED, ABCUR AB, MERCURY PHARMACEUTICALS LIMITED, FOCUS PHARMA HOLDINGS LIMITED, FOCUS PHARMACEUTICALS LIMITED, MERCURY PHARMA (GENERICS) LIMITED, MERCURY PHARMACEUTICALS (IRELAND) LIMITED, AND MERCURY PHARMA INTERNATIONAL LIMITED
CONCORDIA INTERNATIONAL CORP. AND CONCORDIA HEALTHCARE (CANADA) LIMITED
Applicants
AFFIDAVIT OF DAVID PRICE (sworn October 19, 2017)
I, David Price of the city of Toronto, in the Province of Ontario, MAKE OATH AND SAY:
1. I am the Chief Financial Officer of Concordia International Corp. (“CIC”) and a director
and the Chief Financial Officer and Secretary of Concordia Healthcare (Canada) Limited
(“CHCL” and, together with CIC, the “Applicants”). I joined CIC as Chief Financial Officer on
0028
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May 15, 2017, and I have knowledge of the matters deposed to herein. Where I have relied upon
other sources of information, I have stated the source of that information and I believe such
information to be true. The Applicants do not, and do not intend to, waive privilege by any
statement herein.
2. I swear this affidavit in support of an application by the Applicants for a proposed
arrangement (the “Arrangement”) pursuant to section 192 of the Canada Business Corporations
Act, R.S.C. 1985, c. C-44, as amended (the “CBCA”) and for an order pursuant to section 192(4)
of the CBCA substantially in the form to be attached as Tab 3 to the Applicants’ Motion Record
(the “Preliminary Interim Order”), which shall, among other things:
(a) provide a stay of proceedings in respect of the Applicants and the other entities
in the Concordia Group (as defined below) on the terms set out in the proposed
Preliminary Interim Order;
(b) deem service of the motion for the Preliminary Interim Order to be good and
sufficient;
(c) set out the persons entitled to notice of, and to appear and be heard in, the
Arrangement proceedings;
(d) provide for a comeback hearing permitting any interested party that wishes to
amend or vary the Preliminary Interim Order to bring a motion before the Court
on seven business days’ notice to the Applicants and any other party or parties
likely to be affected by the order to be sought by such interested party; and
(e) such further and other relief as this Court deems just.
0029
- 3 -
3. Unless otherwise stated, all monetary amounts contained herein are expressed in U.S.
dollars.
I. OVERVIEW
4. As described in further detail below, CIC, together with its subsidiaries (collectively, the
“Concordia Group” or the “Company”), is a diverse, international specialty pharmaceutical
company primarily focused on off-patent pharmaceutical products. The Concordia Group has an
international footprint with sales in more than 90 countries, and has a diversified portfolio of
more than 200 established, off-patent products. CIC’s common shares (the “Common Shares”)
are listed for trading on the Toronto Stock Exchange (the “TSX”) under the symbol “CXR” and
the NASDAQ Global Select Market (the “NASDAQ”) under the symbol “CXRX”.
5. The purpose of the Arrangement is to give effect to a recapitalization transaction (the
“Recapitalization Transaction”) involving the Secured Term Loans, the Secured Notes, the
Secured FX Swaps, the Unsecured Bridge Loans and the Unsecured Notes (each as defined
below, and collectively, the “Affected Debt” and the documents governing and/or related to the
Affected Debt, the “Affected Debt Instruments”) and the Common Shares.
6. In addition to the Applicants, these proceedings also involve the entities listed on
Schedule “A” hereto (collectively, the “Subsidiary Guarantors”), each of which is a wholly-
owned direct or indirect subsidiary of CIC. The Subsidiary Guarantors collectively own a
significant portion of the assets of the Company’s business and are guarantors under the Affected
Debt Instruments.
0030
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7. In early 2017, the Company engaged in a process to develop a long-term growth strategy
to address certain business challenges facing the Company and improve its capital structure, with
debt reduction as a priority. This process led to the development of a five-year strategic plan
known as the DELIVER Strategy.
8. A key component of the DELIVER Strategy is the strengthening of the Company’s
financial foundation by right-sizing its capital structure. In June of 2017, the Company engaged
Perella Weinberg Partners LP (“PWP”) to provide the Company with financial advisory services
in connection with the development and execution of its long-term growth strategy. These
services include, but are not limited to, helping the Company explore and evaluate potential
transactional alternatives, including initiatives to optimize its capital structure.
9. In the summer of 2017, the Company and its advisors commenced discussions regarding
transactions to improve the Company’s capital structure with (i) a committee comprised of
certain Secured Term Loan Lenders and certain Secured Noteholders (each as defined below)
(the “Secured Debtholders Committee”), (ii) a committee comprised of certain Unsecured
Noteholders (as defined below) (the “Unsecured Debtholders Committee” and, together with
the Secured Debtholders Committee, the “Debtholder Committees”), and (iii) each of the
respective legal and financial advisors for the Secured Debtholders Committee (the “Secured
Debtholder Committee Advisors”) and for the Unsecured Debtholders Committee (the
“Unsecured Debtholder Committee Advisors” and, together with the Secured Debtholder
Committee Advisors, the “Debtholder Committee Advisors”).
10. Since the summer of 2017, the Company and its advisors have been engaged in
discussions with the Debtholder Committees and the Debtholder Committee Advisors in
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connection with the potential Recapitalization Transaction. The Company has entered into
confidentiality agreements with the Debtholder Committee Advisors. The Company has also
executed engagement letters with the legal advisors to the Secured Debtholders Committee and
the Unsecured Debtholders Committee in which it has agreed to pay the reasonable fees and
expenses of these advisors in connection with the potential Recapitalization Transaction.
11. The Company believes that it needs to reduce its debt obligations in order to have a
sustainable capital structure. The Company’s view is that, based on the size and nature of its
existing capital structure, an arrangement is required to reduce its debt obligations. The
Company and its advisors are continuing to work to advance and finalize the terms of the
Recapitalization Transaction on a consensual basis with the Debtholder Committees and the
Debtholder Committee Advisors. It is the Company’s expectation under the Recapitalization
Transaction to reduce the Company’s outstanding indebtedness by more than $2 billion in the
aggregate, significantly reduce its annual interest costs, improve its capital structure and put the
Company on a strong financial footing in order to execute on its long-term growth strategy
moving forward.
12. As described in greater detail below, CIC did not make its October 7.00% Unsecured
Notes Payment (as defined below) due on October 16, 2017 and does not intend to make the
October Unsecured Bridge Loan Payments (as defined below) due on October 20 and 23, 2017 at
this time as the foregoing payments form part of the Affected Debt that is expected to be affected
under the Recapitalization Transaction.
13. The Company intends to continue to satisfy in the ordinary course its scheduled interest
and amortization payments, as applicable, under the Secured Debt and all of its trade and
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employee obligations. As at September 30, 2017, the Company had approximately $342 million
of cash on hand, giving it sufficient liquidity to satisfy these obligations. With the exception of
the October Unsecured Debt Payments (as defined below), the Company is otherwise current on
its payment obligations under all of the Affected Debt and is not, other than in connection with
the commencement of these proceedings and the non-payment of the October Unsecured Debt
Payments, otherwise in default under any of the Affected Debt Instruments.
14. The Applicants require the Preliminary Interim Order and the stay of proceedings
contemplated therein (the “Stay of Proceedings”) to maintain the overall stability for their
business and provide the Company and the Debtholder Committees with a meaningful
opportunity to continue to advance and finalize the terms of the Recapitalization Transaction.
With the benefit of the Stay of Proceedings, the Applicants will have the stability needed to
finalize and execute the Recapitalization Transaction, the Support Agreements (as defined
below) and all other documentation required to implement the Recapitalization and the
Arrangement.
15. The Applicants are continuing to negotiate the terms of the Recapitalization Transaction
and proposed Arrangement with the Debtholder Committees. Upon finalizing these terms, the
Applicants intend to bring forward a motion for an interim order for purposes of, among other
things, calling and holding meetings to vote on the proposed Arrangement (the “Interim
Order”). It is anticipated that, as part of the process to develop the Arrangement and the
Recapitalization Transaction contemplated thereby, the Applicants would enter into definitive
support agreements with the members of the Debtholder Committees (the “Support
Agreements”) prior to returning to Court to seek the Interim Order.
0033
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II. BACKGROUND REGARDING THE COMPANY
(a) Corporate Structure
(i) CIC
16. CIC is the parent corporation of the Concordia Group. A corporate chart showing the
structure of the Company is attached as Exhibit “A”.
17. CIC is a corporation formed pursuant to the Ontario Business Corporations Act (the
“OBCA”) having its registered and head office at 277 Lakeshore Rd. East, Suite 302, Oakville,
Ontario, L6J 1H9 and its records office at 333 Bay St., Suite 2400, Toronto, Ontario M56 2T6.
18. In connection with the Recapitalization Transaction, it is anticipated that CIC will
continue from the OBCA to the CBCA prior to the date that the Applicants seek a final order
approving the Arrangement pursuant to a plan of arrangement (the “Plan of Arrangement”).
(ii) CHCL
19. CHCL is a corporation incorporated pursuant to the CBCA having its registered and head
office at 277 Lakeshore Rd. East, Suite 302, Oakville, Ontario, L6J 1H9.
20. CHCL is a direct wholly-owned subsidiary of CIC and does not carry on any operations
or have any liabilities.
(iii) The Subsidiary Guarantors and the Other Subsidiaries
21. The Company operates its global business through a number of direct and indirect
subsidiaries of CIC around the world. Each of the Subsidiary Guarantors is organized under the
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laws of the jurisdiction set forth beside its name on Schedule “A” hereto. In addition to CHCL
and the Subsidiary Guarantors, CIC has a number of other subsidiaries around the world that are
not involved in these proceedings and are not guarantors under the Affected Debt Instruments.
(b) History of the Company
22. CIC was incorporated on January 20, 2010 as “Mercari Acquisition Corp.” Mercari
Acquisition Corp. completed an initial public offering on May 6, 2010 and was listed on the TSX
Venture Exchange as a capital pool company. On December 18, 2013, Mercari Acquisition Corp.
changed its name to “Concordia Healthcare Corp.” and, on December 20, 2013, completed a
qualifying transaction (the “Qualifying Transaction”) by way of a reverse takeover by the
shareholders of Concordia Healthcare Inc. (“Concordia Private Co.”). Prior to the Qualifying
Transaction, Mercari Acquisition Corp. did not own any assets other than cash and had not
conducted any active business operations. Following completion of the Qualifying Transaction,
the Common Shares began trading on the TSX and, subsequently, the NASDAQ.
23. On January 1, 2016, Concordia Private Co. amalgamated with Concordia Healthcare
Corp. The amalgamated entity’s name remained Concordia Healthcare Corp. until June 27, 2016,
when it was changed to Concordia International Corp.
24. Since completing the Qualifying Transaction in 2013, the Company has established its
pharmaceutical product portfolio through a number of significant acquisitions. Certain of the
Company’s material acquisitions are described below.
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(i) Legacy Products Acquisition
25. In May of 2013, Concordia Pharmaceuticals Inc., S.à.R.L. (“CPI”), one of the Subsidiary
Guarantors, acquired certain rights to certain legacy pharmaceutical products from Shionogi Inc.
(“Shionogi”). The product rights acquired from Shionogi were comprised of three drugs
approved by the United States Food and Drug Administration (the “FDA”): (i) Kapvay®, which
is used to treat Attention Deficit Hyperactivity Disorder; (ii) Orapred ODT®, an anti-
inflammatory used in the treatment of certain pulmonary diseases such as asthma; and (iii)
Ulesfia®, which is a topical treatment for pediculosis (head lice). The consideration payable to
Shionogi for these legacy pharmaceutical product rights included cash on closing and certain
post-closing royalty payments by CPI.
(ii) Photofrin® Acquisition
26. In December of 2013, Concordia Private Co., through its subsidiaries, acquired 100% of
the shares of Pinnacle Biologics, Inc. and its affiliates (collectively, “Pinnacle”). Through this
acquisition, the Concordia Group acquired the rights to the drug Photofrin®, which is used to
treat certain forms of rare cancer and may have potential through further development to be used
to treat additional conditions. The consideration payable for the acquisition of Pinnacle included
cash consideration payable on closing, common shares of Concordia Private Co. and annual
fixed and contingent post-closing cash payments.
(iii) Donnatal® Acquisition
27. In May of 2014, CPI completed the acquisition of the drug Donnatal® from PBM
Pharmaceuticals Inc. Donnatal® is an adjunctive therapy in the treatment of irritable bowel
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syndrome and acute enterocolitis. The consideration payable for the acquisition of Donnatal®
was comprised of a combination of cash consideration and Common Shares.
(iv) Zonegran® Acquisition
28. In September of 2014, CPI acquired certain rights to market Zonegran® in the United
States from Eisai, Inc. for cash consideration. Zonegran® is an antiepileptic first approved by the
FDA in March 2000. The consideration payable for the acquisition of certain rights to market
Zonegran® in the United States was comprised of cash consideration.
(v) Covis Portfolio Acquisition
29. In April of 2015, CPI completed the acquisition of substantially all of the commercial
assets of Covis Pharma S.à.r.l and Covis Injectables S.à.r.l. (collectively, “Covis”) for $1.2
billion in cash (the “Covis Acquisition”). The drug portfolio acquired from Covis (the “Covis
Portfolio”) consisted of branded products and authorized generic pharmaceutical contracts
which treat various medical conditions in various areas including cardiovascular, central nervous
system, oncology and acute care markets. The consideration payable for the acquisition of the
Covis Portfolio was comprised of cash consideration.
(vi) AMCo Acquisition
30. In October of 2015, the Company completed its acquisition (the “AMCo Acquisition”)
of Amdipharm Mercury Limited (“AMCo”) from Cinven Capital Management (V) General
Partner Limited and its associated limited partnerships (collectively, “Cinven”) and certain other
vendors. The AMCo Acquisition provided the Company with entry into new areas such as
endocrinology, neurology, ophthalmology and urology. The purchase price for the AMCo
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Acquisition was satisfied through a combination of cash consideration and Common Shares. In
addition, the AMCo Acquisition required the Company to make certain post-closing earn-out
payments to Cinven and the other vendors.
(c) Overview of the Company’s Business
31. The Company is a diverse, international specialty pharmaceutical company primarily
focused on off-patent pharmaceutical products. The Company generates revenue through the sale
of a diversified portfolio of more than 200 established, off-patent products in more than 90
countries.
32. The Company specializes in the acquisition, licensing and development of off-patent
prescription medicine products, many of which are niche, hard to make products. The Company
operates through a business model that focuses on the registration and regulatory maintenance of
acquired and in-licensed products, with products being manufactured through an out-sourced
manufacturing network of contract manufacturing organizations (“CMOs”). This structure
allows the Company to avoid fixed research and development and manufacturing infrastructure
costs and provides the Company with an efficient and variable cost structure.
33. The Concordia Group is managed from its head office in Oakville, Ontario. Corporate-
level decision making for the Concordia Group is undertaken by the executive management of
CIC, which are located at the Oakville office. In addition, a substantial portion of the
administrative functions of the Company, including general accounting, financial reporting,
budgeting, legal, global tax planning, interacting with the TSX and NASDAQ, managing aspects
of human resources, and certain medical regulatory activities, are conducted out of the Oakville
office.
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34. The Company has two operating segments, in addition to its corporate cost centre in
Oakville, Ontario and its Centre of Excellence in Mumbai, India (described below): (i) the
Company’s international pharmaceutical segment selling branded and generic prescription
products that are sold to wholesalers, hospitals and pharmacies in over 90 countries (“Concordia
International”) and (ii) the Company’s North American legacy pharmaceutical segment, which
also includes its orphan drugs business (“Concordia North America”). Concordia International
and Concordia North America receive additional business support from the Company’s Centre of
Excellence located in Mumbai, India (the “Centre of Excellence”). Each of these segments and
the Centre of Excellence is discussed in detail below.
(ii) Concordia International
35. Concordia International is the Company’s international specialty pharmaceutical
segment, owning or licensing a broad portfolio of branded and generic prescription products that
are sold to wholesalers, hospitals and pharmacies in over 90 countries around the world.
36. The Concordia International business segment focuses on products at the end of a typical
pharmaceutical product lifecycle. These products typically have lengthy prescription histories
which reduces the risk of any new undetected side-effects that could materially alter prescribing
habits. Concordia International’s top products benefit from historically stable demand in most
circumstances, are complex to manufacture and register with applicable drug product regulatory
authorities, and face a lower risk of innovation due to the off-patent stage of their life cycle.
37. Concordia International’s medicines are predominantly manufactured by a number of
CMOs located in Western Europe. For the vast majority of its products, Concordia International
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owns and controls the intellectual property giving it the ability to launch its products in various
geographies, to develop new formulations and to select CMOs of its choice.
38. Concordia International’s products are sold and distributed through two models: the
direct presence (regional hubs) model and the distributor markets model. Concordia International
has a direct sales presence and commercial teams with full control over its sales and marketing
efforts in the United Kingdom, Ireland, Australia, Asia and the Nordic region. In markets where
Concordia International uses distributors for sales and distribution, Concordia International
utilizes area/country managers who manage distributors, train and monitor third-party sales
forces and identify portfolio optimization opportunities.
39. Concordia International’s business represented approximately 72.83% of the Company’s
total consolidated revenue for the first half of 2017 and 68.24% of the Company’s total
consolidated revenue for the 2016 fiscal year.
40. Concordia International’s operations are conducted through Concordia Investments
(Jersey) Limited (“CIJL”, which is one of the Subsidiary Guarantors) and certain other
subsidiaries. Concordia International’s operations are managed by core management teams in
Ireland, Jersey and the United Kingdom and supported by commercial and regulatory teams in
certain international markets. In addition, the Centre of Excellence provides Concordia
International with support on key business functions ranging from regulatory, quality, supply
chain, medical marketing, customer service, human resources, information technology and
finance.
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(iii) Concordia North America
41. Concordia North America is the Company’s North American pharmaceutical segment,
owning or licensing a portfolio of legacy pharmaceutical products consisting of branded and
authorized generic products, including Zonegran®, Donnatal®, Photofrin® and products in the
Covis Portfolio. Concordia North America’s business is focused primarily on the United States
pharmaceutical market.
42. The Concordia North America business segment focuses on branded and authorized
generic products that are in the maturity or legacy stage of the pharmaceutical product lifecycle.
Similar to Concordia International’s products, Concordia North America’s products typically
have a well-established record of safety and efficacy.
43. Concordia North America’s product offering also includes Photofrin®, a product for the
treatment of certain forms of rare cancer, which was previously part of the Company’s “Orphan
Drugs” segment before being combined with the Concordia North America business segment.
44. Concordia North America’s products are manufactured by CMOs in North America and
Western Europe.
45. Concordia North America’s business represented approximately 27.17% of the
Company’s total consolidated revenue for the first half of 2017 and 31.76% of the Company’s
total consolidated revenue for the 2016 fiscal year.
46. Concordia North America’s operations are conducted through CPI and Concordia
Laboratories Inc., S.à.R.L. (“CLI”) (each of which are Subsidiary Guarantors) and certain other
subsidiaries. CPI has a portfolio of branded products and authorized generic contracts and CLI
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owns Photofrin®. Concordia North America’s operations, including supplier relationships, are
managed from offices in Barbados and supported by the Centre of Excellence and by internal
and external advisors.
(iv) Centre of Excellence
47. The Company operates the Centre of Excellence in Mumbai, India. The Centre of
Excellence employs personnel with various backgrounds to provide a range of business support
to its European and North American based teams, including key business functions of finance,
human resources, information technology, supply chain and regulatory, quality and medical
affairs.
(v) Employees
48. As at October 19, 2017, the Company employed 443 employees worldwide, 165 of which
were employed in the Concordia International segment (other than Mumbai), 33 of which were
employed in the Concordia North America segment (including the United States and Barbados)
and 219 of which were employed at the Centre of Excellence.
49. The Company employs 26 employees at its headquarters in Oakville, Ontario. The
Company’s Canadian employees include senior management and employees engaged in
management, financial, legal and administrative roles within the business.
50. None of the Company’s employees are unionized.
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(vi) Competition
51. Competitors in the pharmaceutical market range from large multinational pharmaceutical
and development corporations to small, single product companies that may focus their business
activities on a specific therapeutic area, region or territory. The Company competes with a
variety of other pharmaceutical companies, and there are other products in the market that
compete with many of the products in the Company’s portfolio. In recent years, the Company
has experienced an increase in competition as a result of new market entrants and new products
that compete directly with the Company’s existing products.
(i) Customers
52. As described above, Concordia International’s products are sold and distributed through
two models: the direct presence (regional hubs) model in major markets and the distributor
markets model in other smaller markets. Customers in the United Kingdom account for a
significant portion of Concordia International’s sales, with sales in over 90 other countries
accounting for the balance. Concordia International has a range of wholesale and retail customers
in the United Kingdom, with the primary customer in the United Kingdom being the National
Health Service.
53. Concordia North America sells substantially all of its products directly to three major
wholesalers in the United States, who account for approximately 90% of gross sales. Concordia
North America’s other customers include smaller wholesalers and distributors as well as health
professionals, pharmacists, patients and third-party payors such as group purchasing
organizations and governmental health agencies.
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54. For certain of the Company’s products, a significant portion of sales are made to a
relatively small number of customers.
(ii) Suppliers
55. The Company enters into long-term contracts for the supply and third-party manufacture
of its products. This business model allows the Company to maintain a variable cost structure
and avoid significant fixed costs typically associated with the production of pharmaceutical
products.
56. The Company outsources its product manufacturing services to a number of third-party
CMOs. The Company is partnered with a number of well-known, reputable CMOs such as Haupt
Pharma, Cenexi, B Braun Medical UK and Aesica, among others. The Company’s
manufacturing partners are primarily located in Western Europe and, to a lesser extent, North
America.
(d) Business Challenges
57. The Company currently faces challenges posed by the decline in its operating
performance, high leverage and foreign exchange risks, in addition to business environment
challenges in both the North American and International markets.
(i) Increased Competition and Industry Changes
58. In recent years, the Company has faced increased pressure on its product pricing as a
result of increasing competition and new entrants into the market. In both the Concordia North
America and Concordia International business segments, the launch of directly competing
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generic products, as well as new products that treat the same conditions as the Company’s
existing products, have resulted in decreasing revenues.
59. Concordia North America’s primary customer base is comprised of wholesalers and retail
drug chains who have undergone, and continue to undergo, significant consolidation. This
consolidation has led to additional purchasing leverage for these groups and pricing pressure on
Concordia North America.
(ii) Regulatory Matters
60. The Company has faced certain regulatory challenges in recent years, and is currently
subject to certain ongoing regulatory investigations being conducted by the United Kingdom
Competition and Markets Authority (the “CMA”).
61. On October 25, 2016, the Company announced that the CMA had commenced an
investigation into various matters in relation to the United Kingdom pharmaceutical sector and
that Concordia International was part of the investigation (the “CMA Pricing Investigation”).
The CMA Pricing Investigation includes matters that pre-date the AMCo Acquisition and the
Company’s ownership of the Concordia International business segment and relate to the
Company’s pricing of certain products. Since commencing the CMA Pricing Investigation, the
CMA has been in the process of information gathering and analysis and the Company has
cooperated with the investigation. The CMA has not reached a decision as to whether or not it
will proceed with a finding of infringement in the CMA Pricing Investigation.
62. On March 3, 2017, the Company announced that the CMA had issued a statement of
objections to Actavis UK Limited, Allergen plc, Cinven (Luxco 1) S.A., Cinven Capital
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Management (V) General Partner Limited, Cinven Partners LLP, each third parties, and to CIC,
Amdipharm Limited, Concordia International (Rx) (UK) Limited and Concordia International
(Jersey) Limited (since dissolved), each, other than Concordia International (Jersey) Limited,
either a borrower/issuer or a Subsidiary Guarantor under the Affected Debt Instruments and part
of the Concordia International business segment, in relation to the supply of 10mg
hydrocortisone tablets in the United Kingdom between 2013 and 2016 (the “CMA
Hydrocortisone Investigation”). A statement of objections is a formal statement by the CMA
that it considers that a competition infringement may have occurred. The CMA Hydrocortisone
Investigation also involves matters that predate the AMCo Acquisition and the Company’s
ownership of the Concordia International business segment, and alleges that the parties entered
into agreements under which AMCo (as defined in the statement of objection) was incentivized
not to enter the market with its own competing version of hydrocortisone tablets.
63. The Company responded to the statement of objections and attended an oral hearing to
present the key points of its response to the CMA Hydrocortisone Investigation to the CMA
decision panel. The Company is currently awaiting the CMA’s decision as to whether it may
issue an infringement decision.
64. On October 11, 2017, the Company announced that the CMA commenced additional
investigations in relation to the United Kingdom pharmaceutical sector and that Concordia
International and certain of its products are part of that investigation (the “October 2017 CMA
Investigation” and, collectively with the CMA Pricing Investigation and the CMA
Hydrocortisone Investigation, the “CMA Investigations”). The October 2017 CMA
Investigation also involves matters that predate the AMCo Acquisition and the Company’s
ownership of the Concordia International business segment. The October 2017 CMA
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Investigation is at an early information gathering stage and the CMA has confirmed that, at this
time, it has not reached a conclusion on whether competition law may have been infringed.
65. In addition to the CMA Investigations, on April 27, 2017, the United Kingdom Health
Service Medical Supplies (Cost) Act 2017 (the “HSMS Act”) received Royal Assent in the
United Kingdom. The HSMS Act introduces provisions in connection with controlling the cost
of health service medicines and other medical supplies in the United Kingdom. The HSMS Act
also regulates the provision of pricing and other information by manufacturers, distributors and
suppliers of those medicines and medical supplies. It is anticipated that the Department of Health
will issue new regulations under the HSMS Act in early 2018. The Company continues to
monitor the implementation of the HSMS Act to understand how it will affect the Company’s
business and the pricing of its current products.
(iii) Leverage
66. The Company has expanded significantly since the completion of the Qualifying
Transaction through the acquisitions of companies and portfolios of pharmaceutical products that
resulted in the accumulation of approximately $3.7 billion of long-term debt.
67. Although the majority of the Company’s long-term debt does not mature until 2021 to
2023, the servicing of the long-term debt obligations requires significant cash and the
Company’s high leverage and declining EBITDA have restricted debt and equity funding options
available to the Company, hindering its ability to execute on its long-term growth strategy.
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68. In addition, the Company has been affected by negative foreign exchange movement
between the USD and GBP attributed in large part to the vote by the United Kingdom to leave
the European Union.
(e) Capital Structure
69. CIC’s capital structure consists primarily of the Common Shares, the Secured Term
Loans, the Secured Notes, the Secured FX Swaps, the Unsecured Bridge Loans and the
Unsecured Notes, all as further discussed below.
70. As at September 30, 2017, the Company had cash on hand in the amount of
approximately $342 million.
(i) Equity
71. The authorized capital of CIC consists of an unlimited number of Common Shares. As at
October 19, 2017, there were 51,282,901 Common Shares issued and outstanding. As discussed
above, the Common Shares are listed on the TSX and the NASDAQ. Cinven is CIC’s largest
shareholder, holding approximately 14% of the issued and outstanding Common Shares as a
result of the Common Shares issued to Cinven as part of the AMCo Acquisition.
(ii) Secured Term Loans
72. CIC is the borrower under a credit agreement dated October 21, 2015 among CIC, as
borrower, the Subsidiary Guarantors, as guarantors, Goldman Sachs Bank USA, as
administrative agent and collateral agent (the “Secured Term Loan Agent”), the lenders party
thereto (the “Secured Term Loan Lenders”) and the other arrangers, bookrunners and agents
party thereto (as amended, restated and supplemented from time to time, the “Secured Term
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Loan Credit Agreement”). Pursuant to the Secured Term Loan Credit Agreement, the Secured
Term Loan Lenders agreed to provide secured term loans to CIC in aggregate amounts of $1.1
billion in one tranche (the “USD Secured Term Loan”) and £500 million in another tranche (the
“GBP Secured Term Loan” and, together with the USD Secured Term Loan, the “Secured
Term Loans”), and made available to CIC a secured revolving loan in the aggregate principal
amount of up to $200 million (the “Revolving Loan”). The proceeds of the Secured Term Loans
were used to pay a portion of the purchase price of, and costs related to, the AMCo Acquisition
and to refinance certain of the Company’s indebtedness and certain indebtedness held by AMCo
as at the closing date of the AMCo Acquisition. A copy of the Secured Term Loan Credit
Agreement is attached hereto as Exhibit “B”.1
73. The Secured Term Loans mature on October 21, 2021 and require fixed quarterly
principal amortization payments equal to a percentage of the original principal amount of the
Secured Term Loans (such percentage subject to certain adjustments over time) as well as
mandatory repayments based on CIC’s excess cash flow. Mandatory fixed amortization
payments on the Secured Term Loans of approximately $27.5 million and £12.5 million are due
over the next twelve months. Interest rates on the Secured Term Loans are variable and are
calculated based on LIBOR plus applicable margins, with a LIBOR floor of 1%. Interest on the
Secured Term Loans is payable on the last business day of each of March, June, September and
December for each Base Rate Loan or Canadian Prime Rate Loan (as defined in the Secured
Term Loan Credit Agreement), and on the last day of the applicable one, two, three, six or 12
1 The versions of the various Affected Debt Instruments attached as exhibits to this affidavit are the versions that have been previously publicly filed by the Company, with any applicable redactions for certain sensitive information.
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month interest period as agreed to by the Secured Term Lenders in respect of Eurocurrency Rate
Loans (as defined in the Secured Term Loan Credit Agreement).
74. All obligations under the Secured Term Loans and the Revolving Loan are guaranteed by
the Subsidiary Guarantors and are secured by first priority security interests in the assets of CIC
and the Subsidiary Guarantors, with the exception of certain Excluded Property (as defined in the
Secured Term Loan Credit Agreement).
75. As at October 19, 2017, there was approximately $1.068 billion of principal amount
outstanding under the USD Secured Term Loan, plus accrued and unpaid interest, and
approximately £485.63 million of principal amount outstanding under the GBP Secured Term
Loan, plus accrued and unpaid interest, with no amounts drawn and certain letters of credit
issued under the Revolving Loan.
(iii) Secured Notes
76. CIC is the issuer under a senior secured first lien notes indenture dated October 13, 2016
(as amended, restated and supplemented from time to time, the “Secured Notes Indenture”)
among CIC, as issuer, the Subsidiary Guarantors, as guarantors, and U.S. Bank National
Association, as trustee and collateral agent (the “Secured Notes Trustee”) pursuant to which
CIC issued $350 million of 9.00% senior secured first lien notes due April 1, 2022 (the “Secured
Notes”). A copy of the Secured Notes Indenture is attached hereto as Exhibit “C”.
77. Interest on the Secured Notes is payable semi-annually in arrears on October 1, and April
1 of each year at a rate of 9.00% per annum. The Secured Notes are guaranteed by the Subsidiary
Guarantors and are secured by the same first priority security interests in the same or
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substantially the same assets of CIC and the Subsidiary Guarantors that secure the Secured Term
Loans.
78. The Secured Notes were issued in connection with the Company’s 2016 Strategic Review
(as defined below). Proceeds from the Secured Notes issuance were, and continue to be, used for
general corporate purposes.
79. CIC, the Subsidiary Guarantors, the Secured Term Loan Agent and the Secured Notes
Trustee are party to an intercreditor agreement dated October 13, 2016 (the “Intercreditor
Agreement”). The Intercreditor Agreement provides that the Secured Term Loan Lenders and
the holders of the Secured Notes (the “Secured Noteholders”) will share rateably on any
proceeds generated from the collateral securing the Secured Term Loans and the Secured Notes.
Pursuant to the Intercreditor Agreement, notwithstanding the equal priority of the liens securing
the Secured Term Loans and the Secured Notes, only the Applicable Authorized Representative
(as defined in the Intercreditor Agreement) will have the right to act or refrain from acting with
respect to any collateral securing the Secured Term Loans and Secured Notes. The Applicable
Authorized Representative will be the Secured Term Loan Agent until the Secured Term Loans
have been repaid and discharged or until the expiration of a specified period after an event of
default under the Secured Notes during which period the Secured Term Loan Agent has not
taken and pursued enforcement action.
(iv) Secured FX Swaps
80. The majority of the Company’s long-term debt obligations are denominated in USD other
than the GBP Secured Term Loan. On August 17, 2016, CIJL entered into a cross-currency swap
(the “August 2016 Swap”) under the 2002 Master ISDA Agreement dated August 15, 2016 (the
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“ISDA Agreement”) between Goldman Sachs International (the “Swap Lender”) and CIJL in
order to reduce the Company’s exposure to exchange rate fluctuations between GBP and USD on
certain repayments of its long-term debt agreements. The August 2016 Swap has a principal
amount of $382 million and a maturity date of April 15, 2023. The Swap Lender, the Secured
Term Loan Lenders and the Secured Noteholders are collectively referred to herein as the
“Secured Debtholders”. The Secured Debtholders and the Unsecured Debtholders (as defined
below) are collectively referred to herein as the “Debtholders”.
81. On November 3, 2016, CIJL entered into a cross-currency swap (the “November 2016
Swap” and, together with the August 2016