Perrigo Company Limited (PCL) — Form 10-Q Summary
Reporting period: Three months ended September 28, 2013. The filing is for PCL, an Irish acquisition vehicle formed in June 2013 to facilitate Perrigo’s proposed acquisition of Elan and combination with Perrigo—not for Perrigo’s operating business on a consolidated basis. Amounts are in U.S. dollars.
Financial results and position
| Metric | Result |
|---|---|
| Net sales | $0; PCL had no products or customers. |
| Operating expenses | $4,007. |
| Interest expense | $186,667, paid by Perrigo. |
| Net loss | $190,670; no income tax expense was recorded. |
| Other comprehensive loss | $16,510,386, from the fair-value change in interest-rate swaps. |
| Comprehensive loss | $16,701,056. |
| Cash flow | No net cash provided by or used in operating activities; cash increased by $4 to $135. |
| Assets at September 28 | $13,134,086, including $4,707,901 of deferred share-issuance costs and $8,406,012 of deferred financing costs. |
| Liabilities at September 28 | $29,835,011: $13,324,625 payable to Perrigo and $16,510,386 derivative liability. No borrowings were outstanding. |
| Shareholders’ deficit | $16,700,925. |
Current assets were $4,728,074 against current liabilities of $13,324,625. The filing reports no operating margins or meaningful operating-business liquidity metrics for PCL.
Changes versus the prior period
The balance sheet compares September 28, 2013 with June 29, 2013, when PCL reported $131 of cash and $131 of equity. During the quarter, PCL recorded deferred transaction and financing costs, a payable to Perrigo, a net loss, and a $16.5 million liability on interest-rate swaps. The filing provides no prior comparable operating-period results.
Transaction, financing, outlook, and risks
- Proposed transaction: Under the July 28 agreement, Elan shareholders were to receive $6.25 cash and 0.07636 PCL ordinary share per Elan share; each Perrigo common share was to convert into one PCL ordinary share and $0.01 cash. Former Elan and Perrigo shareholders were expected to own approximately 29% and 71% of PCL, respectively. These were proposed terms; this filing does not report closing.
- Financing commitments: PCL had a $1.0 billion term loan commitment ($300 million tranche maturing two years after closing and $700 million tranche maturing five years after closing), a $600 million revolving facility, and bridge commitments including $1.65 billion of debt bridge and up to $1.7 billion of cash bridge financing. The facilities were intended to fund transaction consideration, repay certain Perrigo debt, and cover expenses. No loans were outstanding at quarter-end.
- Hedging: PCL entered into $725 million notional forward interest-rate swaps to hedge expected acquisition-financing costs. Their $16.5 million fair-value loss was recorded in other comprehensive loss; management reported no hedge ineffectiveness.
- Taxes and guidance: PCL recorded no deferred tax asset because it concluded the loss and derivative liability did not create realizable tax benefits. No earnings or operating guidance was provided.
- Risks and contingencies: Management highlighted potential delay or failure to close the Elan acquisition, integration difficulties, legal or regulatory changes, interest-rate movements, and deterioration in economic conditions. PCL incorporated risk factors from its Form S-4/A; it reported no material changes to those factors.
- Subsequent events: On October 21–22, PCL authorized and completed share-capital changes and issued shares in preparation for the transaction. As of October 31, 23,000,015 ordinary shares and 40,000 deferred ordinary shares were outstanding.
Important facts for investors to verify
- Whether the Elan acquisition and Perrigo merger closed, and whether the announced consideration and ownership split changed.
- Whether committed facilities were funded, the final debt balance and terms, and the impact of transaction financing on liquidity.
- How the swap liability and deferred transaction costs were treated after closing, including any effects on earnings and equity.
- The subsequent share issuances and resulting share count, dilution, and listing arrangements.
- Whether transaction, integration, regulatory, or financing risks identified in the filing materialized.