Galapagos S.A.
Galapagos S.A.: Noteholder Announcement
EQS-News: Galapagos S.A. / Key word(s): Agreement
NOTICE Galapagos S.A. Senior Secured Floating Rate Notes due 2021 Luxembourg – 10.00 a.m., 7 June 2019 Galapagos S.A. announces that it has received overwhelming support from financial stakeholders to its proposed balance sheet restructuring transaction Galapagos S.A., a public limited liability company (société anonyme) incorporated under the laws of the Grand Duchy of Luxembourg (together with its subsidiaries and Galapagos Holding S.A., its direct parent company, the “Group“), is pleased to announce that holders representing in excess of 79% of its Senior Secured Notes (the “Existing SSNs“), all of the lenders under its Super Senior RCF Agreement and all of the lenders under its Super Senior Guarantee Facility Agreement and certain Triton-managed funds have executed a lock-up agreement (the “Lock-up Agreement“). By their execution of the Lock-up Agreement those parties agree to support the implementation of a balance-sheet restructuring transaction, which will see a major recapitalisation of the business, a de-leveraging of the Group’s balance sheet and an extension of the Group’s debt maturities, subject to the satisfaction of certain conditions precedent (the “Transaction“). As part of the Transaction, the shares in Galapagos Bidco S.à.r.l. (“Bidco“) will be transferred to a newly established entity controlled by the Group’s majority shareholder, Triton Fund IV, and Triton Fund IV shall make an investment (of which an amount to be determined by Triton may be offered to other co-investors from the SUN Holders (as defined below)), directly or indirectly, of EUR140 million in equity and/or subordinated debt through the new entity to Bidco and its subsidiaries (together, the “New Group“), subject to the terms of the Lock-up Agreement and the satisfaction of certain conditions precedent (the “Investment“). Further, the Group also announces that Triton Fund IV has committed to provide, directly or indirectly, up to EUR24.8 million in interim funding to Bidco as an additional revolving facility under the Super Senior RCF Agreement on the basis of agreed terms set out below. This funding is expected to provide additional liquidity to the Group to further strengthen its liquidity profile in the short-term while the Transaction is being implemented and consummated, as well as pay transaction costs associated with the Transaction. This funding will be repaid in full with the proceeds of the Investment upon the consummation of the Transaction. Jürgen Vinkenflügel, CEO of Kelvion, said: “We are very pleased with the outcome of the ongoing discussions with the Group’s stakeholders whom we thank for their ongoing and constructive support regarding the Group’s proposed balance sheet restructuring transaction. We now have made an important step towards achieving a sustainable long-term solution for the Group, which will help us strengthen our global top-3 position in the integrated heat exchangers market. In particular, we are grateful that our owner Triton remains fully committed to its investment, is provided interim funding to bridge through to implementation of the transaction and is willing to further support our business going forward.” Lock-up Agreement Pursuant to the Lock-up Agreement, the required holders of the Existing SSNs and the lenders under the Super Senior RCF Agreement and Super Senior Guarantee Facility Agreement (together, the “Consenting Creditors“) have confirmed that they will support the implementation and consummation of the Transaction on the basis of the agreed terms set out below. Outline of Transaction It has been agreed that the Transaction would result in: – the existing drawings under the Super Senior RCF Agreement being fully repaid or otherwise cleaned down to zero, and the lenders under the Super Senior RCF Agreement continuing to make available to the New Group revolving credit facilities following the consummation of the Transaction (“New RCF“); – the lenders under the Super Senior Guarantee Facility Agreement making available to the New Group letter of credit and guarantee facilities following the consummation of the Transaction (“New SGF“); – the Existing SSNs being repaid in full and the New Group incurring (i) a new third-party debt instrument in an equivalent amount (“New Third-Party Debt“) or (ii) EUR333 million (before the application of any original issue discount, if applicable) of new New York-law governed senior secured fixed rate notes that would be issued to holders of Existing SSNs through an English law scheme of arrangement (“New SSNs“); and – Triton Fund IV committing to make the Investment and remaining the New Group’s majority shareholder. Key Lock-up Agreement Terms Under the terms of the Lock-up Agreement: – each of the Consenting Creditors, certain Triton funds, Galapagos S.A. and certain other Group companies undertake to take all actions necessary to support, facilitate, implement, consummate or otherwise give effect to the Transaction, including entering into good faith negotiations to agree the definitive transaction documents; – the Consenting Creditors have given certain waivers and forbearances in connection with the implementation of the Transaction and have agreed not to take any enforcement action (subject to certain customary exceptions) other than as contemplated by the Alternative Transaction (as defined below); – Galapagos S.A. and certain other Group companies have given undertakings to the Consenting Creditors, including in relation to the incurrence of further indebtedness, the granting of new security, changes to their capital structure, payment of dividends, making disposals and the entry into, amendment or termination of material contracts; – Consenting Creditors may not transfer or sub-participate any of their debt which is subject to the Lock-up Agreement unless the transferee or sub-participant agrees to be bound by the terms of the Lock-up Agreement; and – certain customary termination events apply (some of which are automatic and some of which are voluntary and exercisable by different parties), including (without limitation) failure to complete the Transaction by 31 October 2019 (or such later deadline as may be agreed under the Lock-up Agreement), material non-compliance with the terms of the Lock-up Agreement by certain parties, the occurrence of an insolvency event or enforcement action with respect to certain Group companies and the failure to satisfy certain implementation milestones by the specified dates. All conditions to the Lock-up Agreement becoming fully effective have been satisfied. Interest payments relating to Existing SSNs and SUNs In view of the Transaction and the standstill arrangements that exist under the Lock-up Agreement and the Intercreditor Agreement (as described below), the Group’s current intention is not to pay the next interest payments with respect to the Existing SSNs or the SUNs (as defined below) when due on 15 June 2019 (or on the expiry of any relevant grace period). Under the terms of the Lock-up Agreement, the Consenting Creditors have agreed not to take any enforcement action that they would otherwise be entitled to take by reason of the non-payment of interest with respect to the Existing SSNs or the SUNs. Under the terms of the Intercreditor Agreement, the holders of the SUNs would not be entitled to take any enforcement action against Galapagos S.A. or its subsidiaries until at least 179 days have elapsed following the occurrence of an Event of Default and due notice has been given. All accrued but unpaid interest on the Existing SSNs will be paid in full on consummation of the Transaction. Fees Investors who hold Existing SSNs and who enter into the Lock-up Agreement on or before 5pm London time on 19 June 2019 will be entitled to a fee equal to 1.00% of the total outstanding amount of their Existing SSNs as at the Restructuring Effective Time (as defined in the Lock-up Agreement) (to the extent that such Existing SSNs were subject to the Lock-up Agreement as at 19 June 2019), which shall be payable on the Restructuring Effective Time (the “SSN Early Bird Lock-up Fee“). Investors who hold Existing SSNs and who enter into the Lock-up Agreement after 19 June 2019 but on or before 5pm London time on 2 July 2019 will be entitled to a fee equal to 0.20% of the total outstanding amount of their Existing SSNs as at the Restructuring Effective Time (to the extent that such Existing SSNs were subject to the Lock-up Agreement as at 2 July 2019), which shall be payable on the Restructuring Effective Time (the “SSN Lock-up Fee“). Further, investors who hold Existing SSNs and who enter into the Lock-up Agreement on or before 2 July 2019 will be entitled to a fee equal to 3.00% of the total outstanding amount of their Existing SSNs as at the Restructuring Effective Time (to the extent that such Existing SSNs were subject to the Lock-up Agreement as at 2 July 2019) if the Transaction is implemented through the Alternative Transaction (as defined below) and the Existing SSNs are refinanced with New Third-Party Debt (the “SSN Refinancing Fee“). Please see below for further details on how to obtain additional information / be eligible to receive these fees. SUN Holders The Group is in discussions with an ad hoc group (the “SUN AHG“) of holders of the 7% Senior Notes due 2022 of Galapagos Holding S.A. (the “SUNs” and the “SUN Holders“). The Group hopes to reach a consensual agreement with the SUN AHG regarding the participation of the SUN Holders in the Transaction (the “Consensual Transaction“). However, if a Consensual Transaction cannot be agreed with the requisite majority of the SUN Holders, the Lock-up Agreement contemplates an alternative transaction which would not require the consent of the SUN Holders and which would implement the Transaction through an enforcement sale of the shares in, and intercompany debt owed by, Bidco in conjunction with the exercise of certain rights under the Group’s intercreditor agreement (the “Alternative Transaction“). New RCF The New RCF will consist of a EUR65,000,000 multi-currency revolving facility and will bear interest at a rate of LIBOR or EURIBOR (each subject to a 0% floor), plus a margin equal to 4.25% per annum (which may be adjusted lower based on the leverage of the New Group). The New RCF will mature four years from the Restructuring Effective Time, with a one-year automatic extension provided certain conditions are satisfied. The New RCF will include minimum EBITDA, total net leverage and minimum liquidity financial covenants and will include incurrence-based covenants substantially similar to those in the New SSNs. The New RCF will rank (i) as to right of payment, pari passu with the New SSNs or any New Third-Party Debt (as applicable), New SGF and certain hedging obligations, and (ii) as to proceeds of enforcement of certain security, pari passu with the New SGF and certain hedging obligations and senior to the New SSNs or New Third-Party Debt (as applicable). New SGF The New SGF will consist of a EUR260,000,000 multi-currency revolving guarantee, indemnity and letter of credit facility. Letter of credit fees will be payable at 3.00% per annum (which may be adjusted lower subject to a ratchet based on the leverage of the New Group) for non-cash covered letters of credit and 0.75% per annum for cash covered letters of credit. The New SGF will largely mirror the terms of the New RCF (as applicable), including as to maturity, financial covenants and incurrence-based covenants (described in the section entitled “New RCF” above as those terms relate to the New RCF). The New SGF will rank (i) as to right of payment, pari passu with the New SSNs or any New Third-Party Debt (as applicable), New RCF and certain hedging obligations and (ii) as to proceeds of enforcement of certain security, pari passu with the New RCF and certain hedging obligations and senior to the New SSNs or New Third-Party Debt (as applicable). New SSNs that may be issued to holders of Existing SSNs The New SSNs would rank (i) as to right of payment, pari passu with the New RCF, New SGF and certain hedging obligations and (ii) as to proceeds of enforcement of certain security, junior to the New RCF, New SGF and certain hedging obligations. New Third-Party Debt Sale Process Galapagos S.A. has engaged Macquarie Capital to advise it in connection with a potential competitive sales process relating to Bidco in connection with the implementation of the Alternative Transaction. Further details of this process will be announced in due course. Next Steps As the terms of the Transaction have been agreed and the necessary approvals have been achieved, the remaining steps primarily involve the preparation and execution of the legal documentation required to implement the Transaction, completion of any relevant implementation processes (including, without limitation, any English law scheme of arrangement) and satisfaction of other closing conditions. For the purposes of facilitating the implementation of the Transaction, Galapagos Holding S.A. and Galapagos S.A. intend to take certain steps in the coming weeks to establish a business address in the United Kingdom and to reconstitute their boards with a majority of directors resident in the United Kingdom. Further details will be announced in due course. As noted above, the Group intends to continue discussions with the SUN AHG for a limited period to determine whether a Consensual Transaction is viable. If so, the Group anticipates that it will enter into a lock-up agreement (on similar terms to the Lock-up Agreement) with the relevant SUN Holders before preparing for and commencing any relevant implementation process with respect to those instruments. If a Consensual Transaction is not agreed with a majority of the SUN Holders by 5pm London time on 14 June 2019 (such deadline being capable of extension with the consent of certain parties to the Lock-up Agreement), the Group intends to proceed on the basis of the Alternative Transaction. The Group is targeting completion of the Transaction as soon as possible and in any event on or before 31 October 2019 and will continue working with key stakeholders to complete the Transaction. Further announcements and updates in relation to the Transaction will be provided to investors in due course. There can be no guarantee that the Transaction as contemplated by the Lock-up Agreement will be implemented on the terms set out above, and any balance-sheet restructuring of the Group may be on significantly different terms to the ones set forth in this announcement or not be consummated at all. Furthermore, the completion of the Transaction may take significantly more time than the Group is currently targeting. How to obtain additional information / be eligible to receive fees Investors who beneficially hold Existing SSNs may contact Macquarie Capital for more information about the Lock-up Agreement and the Transaction: Macquarie Capital (Europe) Limited, Niederlassung Deutschland Max Mayer-Eming / Max.Mayer-Eming@macquarie.com / +49(0)69509578466 Parties may also wish to contact Moelis & Company, who are acting as financial advisers to an ad hoc group of holders of the Existing SSNs: Moelis & Company Charles Noel-Johnson / Charles.Noel-Johnson@moelis.com / +44(0)2076343568 If investors who beneficially hold Existing SSNs wish to be eligible to receive the SSN Early Bird Lock-up Fee, the SSN Lock-up Fee and/or the SSN Refinancing Fee, they should take these steps as soon as possible. **************** For further information, please contact: Anna Steudel, Investor Relations **************** This announcement contains inside information of Galapagos S.A. for the purposes of Article 7 under Regulation (EU) 596/2014. **************** Disclaimer This press release has been prepared by the Group solely for informational purposes and does not constitute, and should not be construed as, an offer to sell or issue securities or otherwise constitute an invitation or inducement to any person to purchase, underwrite, subscribe to or otherwise acquire securities in any Group entity. Certain statements contained in this press release that are not statements of historical fact, including, without limitation, any statements preceded by, followed by or including the words “targets,” “believes,” “expects,” “aims,” “intends,” “may,” “anticipates,” “would,” “could” or similar expressions or the negative thereof, constitute forward-looking statements, notwithstanding that such statements are not specifically identified. Examples of forward-looking statements include, but are not limited to: (i) statements about future financial and operating results; (ii) statements of strategic objectives, business prospects, future financial condition, budgets, projected levels of production, projected costs and projected levels of revenues and profits of the Group or its management or boards of directors; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions which are difficult to predict and outside of the control of the management of the Group. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. We have based these assumptions on information currently available to us, and if any one or more of these assumptions turn out to be incorrect, actual market results may differ from those predicted. While we do not know what impact any such differences may have on our business, if there are such differences, our future results of operations and financial condition, could be materially adversely affected. You should not place undue reliance on these forward-looking statements. Forward-looking statements speak only as of the date on which such statements are made. The Group expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. Neither the Group nor any of its advisors or representatives shall have no liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this press release or its contents. The information contained in this press release does not constitute investment advice. This press release is not for publication, release or distribution in Canada, Japan or Australia. Any failure to comply with this restriction may constitute a violation of securities laws. This press release and the information contained herein are not an offer of securities for sale in the United States or to US persons. Any securities referred to herein have not and will not be registered under the Securities Act and may not be offered or sold in the United States or to US persons. Any public offering of securities to be made in the United States would have to be made by means of a prospectus that would be obtainable from the Group and would contain detailed information about the Group, of any securities and its management, as well as financial statements. No money, securities or other consideration is being solicited, and, if sent in response to the information contained herein, will not be accepted.
07.06.2019 Dissemination of Corporate News, transmitted by EQS – a service of EQS Group AG. |
Language: | English |
Company: | Galapagos S.A. |
2C, rue Albert Borschette | |
L-1246 Luxembourg | |
Grand Duchy of Luxembourg | |
Phone: | +352 26 753 0 |
E-mail: | lechantre@triton-partners.com |
ISIN: | XS1071411547, XS1072185488, XS1071419524, XS1072194803 |
WKN: | A1ZJ4P |
Listed: | Foreign Exchange(s) Luxembourg Stock Exchange |
EQS News ID: | 821231 |
End of News | EQS News Service |