Item 1.01 Entry into a Material Definitive Agreement
As previously disclosed, Zealand Pharma A/S, (the "Purchaser"), and Valeritas
Holdings, Inc. (the "Company") and certain of its subsidiaries (together, the
"Sellers") entered into an Asset Purchase Agreement (the "Purchase Agreement")
pursuant to which, subject to the conditions described below, the Purchaser
agreed to purchase substantially all of the assets of the Company (such assets,
the "Assets," and such transaction, the "Asset Sale"). The consideration for the
Asset Sale provided for in the Purchase Agreement is comprised of (i) $23
million in cash and (ii) the assumption of certain liabilities of the Debtors,
all as set forth in the Purchase Agreement. A copy of the Purchase Agreement is
filed as Exhibit 10.1 to this Current Report on Form 8-K, and is incorporated by
reference herein.
The Company cautions that trading in its securities during the pendency of the
Chapter 11 Case (as defined below) is highly speculative and poses substantial
risks. Trading prices for the Company's securities may bear little or no
relationship to the actual recovery, if any, by holders of the Company's
securities in the Chapter 11 Case. Based upon the current proceeds available
from the Asset sale pursuant to the Purchase Agreement, after payment to the
Company's superpriority lenders, the other secured lenders and the payment of
other liabilities, there will not be any proceeds available for distribution to
the holders of the Company's common stock.
Creation of a Direct Financial Obligation or an Obligation under an
Item 2.03 Off-Balance Sheet Arrangement of a Registrant.
On February 14, 2020, the United States Bankruptcy Court for the District of
Delaware (the "Bankruptcy Court") entered an order (the "DIP Order") granting an
interim approval to the Company's proposed senior secured priming
debtor-in-possession financing facility (the "DIP Facility") by and among the
Sellers, as borrower, the Lenders (as defined therein) party thereto, and HB
Fund LLC, as the "DIP Lender."
Under the terms of the DIP Order, the Company will have access to $5.5 million
of the proposed $12.0 million DIP Facility. The Company will use the proceeds
from the DIP Facility to continue its ordinary business during the Chapter 11
Case, and to provide a bridge for the Company to sell its assets through the
bankruptcy. The Bankruptcy Court will consider final approval of the full DIP
funding at a future hearing to be held on March 12, 2020.
The foregoing description of the DIP Facility does not purport to be complete
and is qualified in its entirety by reference to the final,
executed DIP Facility, as approved by the Bankruptcy Court.
Further, on February 12, 2020, in addition to other customary orders for relief,
the Bankruptcy Court also issued an interim order approving (i) prepetition
wages and compensation for the Company's employees, and (ii) for the Company to
honor and continuing offering benefits programs for its employees.
Notice of Delisting or Failure to Satisfy a Continued Listing Rule or
Item 3.01 Standard; Transfer of Listing.
As previously reported, on February 9, 2020, the Sellers filed voluntary
petitions (the "Chapter 11 Case") in the Bankruptcy Court seeking relief under
Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code").
On February 10, 2020, the Company received a letter (the "Nasdaq Letter") from
the staff of the Nasdaq Listing Qualifications Department (the "Staff")
notifying the Company that, as a result of the Chapter 11 Case and in accordance
with Nasdaq Listing Rules 5101, 5110(b) and IM-5101-1, the Staff has provided
notification to the Company that the Company's common stock, par value $0.001
per share (the "Common Stock"), will be delisted from Nasdaq. The Nasdaq Letter
stated that the Staff's determination was based on: (i) the filing of the
Chapter 11 Case and associated public interest concerns raised by it; (ii)
concerns regarding the residual equity interest of the existing listed
securities holders; and (iii) concerns about the Company's ability to sustain
compliance with all requirements of continued list on Nasdaq, including the
minimum required closing bid price for continued listing on the Nasdaq Capital
Market pursuant to Listing Rule 5550(a)(2), for which the Company remains
subject to a grace period afforded by Nasdaq rules.
Based on the Nasdaq Letter, unless the Company requests an appeal of this
determination to a Nasdaq Hearings Panel, trading of the Company's Common Stock
will be suspended at the opening of business on February 20, 2020 and a Form
25-NSE will be filed with the Securities and Exchange Commission (the "SEC"),
which will remove the company's Common
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Stock from listing and registration on Nasdaq. The Company does not intend to
request a hearing with Nasdaq, and therefore, the Company's Common Stock will be
delisted from Nasdaq, effective at the opening of business on February 20, 2020.
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit Number Description
Asset Purchase Agreement by and among Zealand Pharma A/S as
Purchaser, and Valeritas, Inc. and Valeritas Holdings, Inc., as
10.1 Sellers
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