Drugmaker Mallinckrodt said on Wednesday it expects to file for a second bankruptcy in the coming days, after reaching a debt reduction deal that would cut $1 billion from the amount it owes to victims of the opioid crisis.
The agreement announced Wednesday would reduce Mallinckrodt’s debt by about $1.9 billion and cancel existing equity shares. Mallinckrodt’s creditors would end up owning the company, which previously filed for bankruptcy in 2020.
The drugmaker’s shares, which have already lost about 92% of their value this year, fell 19% to close at 47¼ cents.
The company will make a one-time and final payment of $250 million to the trust in addition to $450 million it has paid. The new deal would leave opioid creditors with $1 billion less than the $1.7 billion settlement that Mallinckrodt agreed to pay as part of its 2022 exit from the company’s earlier bankruptcy.
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Mallinckrodt failed to make a $200 million payment to the opioid trust due in June, prompting the company to launch a negotiation with its stakeholders.
The agreement and bankruptcy will “enable Mallinckrodt to better align our balance sheet with our current business plan,†said Siggi Olafsson, the company’s president and chief executive officer.
Mallinckrodt said that its current level of creditor support should allow the company to complete its second bankruptcy by the end of 2023.
The company, one of the largest manufacturers of opioids, also makes generic and branded drugs such as Acthar Gel, which is used to treat multiple sclerosis and infantile spasms.
Before its 2020 bankruptcy filing, Mallinckrodt was a defendant in more than 3,000 lawsuits alleging that it used deceptive and misleading marketing tactics to boost its sales of highly addictive opioid drugs.
Drug manufacturers, drug distributors and pharmacy chains have agreed to pay more than $50 billion in settlements to resolve lawsuits related to the U.S. opioid crisis.
Mallinckrodt, registered in Ireland as a public limited company, has U.S. offices in Missouri and New Jersey. Mallinckrodt’s U.S. subsidiary, Webster Groves-based SpecGx, and another generic drugmaker, Actavis Pharma, produced the vast amount of prescription opioids distributed throughout the country.
Mallinckrodt traces its start to 1867 when three Mallinckrodt brothers founded a chemical concern in ºüÀêÊÓƵ that later became a major supplier of pharmaceuticals.
Beginning in the 1940s, the Mallinckrodt Chemical Works in downtown ºüÀêÊÓƵ processed uranium ore for the development of the first atomic bomb.
The Post-Dispatch contributed to this report.
Updated at 4:15 p.m.