Mallinckrodt to sell unit BioVectra for up to $250 mln to reduce debt
Adds details on the deal, background
Sept 10 (Reuters) - Mallinckrodt Plc MNK.N said on Tuesday it would sell BioVectra Inc to private equity firm H.I.G. Capital for up to $250 million, a week after the drugmaker downplayed bankruptcy concerns amid opioid litigation uncertainties.
The company's shares were up about 13% at $2.37 in trading before the bell after it said it intended to use proceeds from the divestiture to pay off debt.
As of June 28, Mallinckrodt had net debt of over $5 billion, and last week it agreed to pay cash of $24 million to two Ohio counties, to fully resolve certain opioid-related lawsuits and to avoid going to trial in October.
Mallinckrodt and other opioid makers in the United States face pressure from a crackdown on the addictive drug in the wake of the opioid crisis and as several state attorneys general file lawsuits against manufacturers.
Investors have been worried about Mallinckrodt's large debt pile and potential payouts to resolve opioid litigation.
According to media reports, the company last week hired restructuring firms, stoking fears of it choosing to seek bankruptcy protection.
The drugmaker dismissed the concerns, saying it hires advisers "all the time."
The deal to separate contract development and manufacturing firm BioVectra, continues to advance Mallinckrodt's strategic focus on branded, high-growth biopharmaceuticals by monetizing a non-core business, CEO Mark Trudeau said.
BioVectra sale will bring in an upfront payment of $135 million, a long-term note for $40 million and contingent payments of up to $75 million.
Mallinckrodt said last week that it was still focused on separating its specialty generics unit, a plan it suspended last month, citing opioid litigation uncertainties.
(Reporting by Manojna Maddipatla in Bengaluru; Editing by Shinjini Ganguli)
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