Ireland’s Elan Corporation witnessed not insignificant increases in its share price in both London and Dublin this morning after announcing that it had retired $211.8 million dollars of its outstanding debt, which is due in 2008, and had agreed to pay off a further $31 million within the next few days.
Shane Cooke, Elan’s chief financial officer, commented: “Our cash balances at the end of March 2005 will be reduced by about $80 million but remain in excess of $1.3 billion. These transactions will result in no additional dilution to our shareholders and will reduce our annual interest cost by about $16 million.” The firm’s withdrawal of its multiple sclerosis offering, Tysabri (natalizumab), earlier this year after being linked to a serious neurological side effect [[01/03/05a]], had made investors question whether it would be able to pay off the debt. Tysabri had been expected to become a big earner for the Irish company, helping it return to profitability and pay off its outstanding debt [[28/10/04c]].
Elan said it bought $175 million, and agreed to purchase a further $31 million, of 6.5% convertible guaranteed notes due 2008 for approximately $255 million – or at an average premium of approximately 4% to the market price. The firm also said it had purchased $36.8 million of the 7.25% senior notes due 2008 (also known as Athena Notes) for $33.3 million plus accrued interest of $0.6 million. After the purchases, $613.2 million worth of these notes remain outstanding.
As a result of these transactions, Elan will record a net charge of approximately $53 million in the second quarter.
- Meanwhile, Elan has appointed five new members to its board of directors. The three new non-executive board members are Goran Ando, Gary Kennedy and Nancy Lurker, and the two new executive board members are Shane Cooke and Lars Ekman.
Dr Goran Ando’s career in the pharmaceutical industry spans almost three decades, and included eight years of senior leadership at Pharmacia, most recently as executive vice president and president of research and development. Gary Kennedy is group director, finance and enterprise technology at Allied Irish Banks – Ireland’s largest bank, while Nancy Lurker has been chief executive and president of ImpactRX since 2003. With 20 years Industry experience, she was most recently group vice president, global prescription business at Pharmacia.
Executive vice president, Shane Cooke, has been Elan’s CFO since July 2001 and was previously chief executive of Pembroke Capital Limited, an aviation leasing company. Executive vice president, Lars Ekman, is president of R&D and head of the neurodegeneration business at Elan. Prior to joining Elan in 2001, Dr Ekman held a variety of positions, included serving as the head of R&D with Schwarz Pharma.