UPDATE 2-Angiotech wins temporary financing as loss widens
* Q3 loss $0.22/shr vs loss $0.09/shr last year
* Rev up 7 pct at C$59 mln; royalty rev down 56 pct
* Amends credit facility to access up to $25 mln
* Shares tumble 12.5 pct in Toronto (Adds conference call, background, stock; in U.S. dollars unless noted)
By Solarina Ho
TORONTO, Nov 9 (Reuters) - Troubled Canadian biotech company Angiotech Pharmaceuticals Inc ANP.TO said it had entered into a temporary loan agreement to carry it through to its planned recapitalization, as it reported a wider quarterly loss on Tuesday.
Late last month, the maker of specialty pharmaceuticals and medical devices announced a recapitalization plan that would cut its debt by $250 million, or just under half the total.
Vancouver-based Angiotech said on Tuesday it had signed an amended financing deal with Wells Fargo Capital Finance to receive immediate access to $25 million as a stop-gap measure. The amended credit facility will be available until April 30 or until the completion of the recapitalization plan.
Under the proposed plan, senior subordinated noteholders would receive 93.5 percent ownership of Angiotech's common equity, Chief Financial Officer Thomas Bailey said during a conference call with analysts. The $325 million senior floating rate note would remain outstanding with most terms unchanged.
The proposal, if approved, would significantly dilute existing shareholdings, though Bailey warned the alternative for shareholders would likely be worse.
"It's an understatement to say that this management team, board, company and our advisors have turned over every possible stone," said Bailey, adding that a majority of the company's noteholders support the refinancing proposal.
Angiotech said it would need debtholders with at least 98 percent of the amount of the subordinated notes to agree to the exchange offer by Jan. 7, 2011. Shareholders will also be required to vote separately on the transaction.
Given Angiotech's financial situation, "it would be very difficult to materially delay the transaction's conclusion simply in order to secure a favorable shareholder vote," said Bailey, warning that the company may be forced to seek bankruptcy protection if the refinancing plan fails.
"For equity shareholders, the alternative is bankruptcy and likely zero value," RBC Dominion Securities analyst Douglas Miehm wrote in a research note last week.
STRONG PRODUCT SALES
Angiotech's July-September net loss more than doubled, widening to $18.5 million, or 22 cents a share, from a loss of $7.8 million, or 9 cents a share, a year ago.
The results were hit by falling demand for its Taxus stent devices, down 56 percent in the quarter, and by higher expenses.
The company, which receives most of its royalty revenue from Boston Scientific Corp (BSX.N), has been hit in recent years by sinking sales of its drug-coated stents due to rival products. Stents are tiny tubes used to prop open arteries. Angiotech developed the technology for the Taxus stent and Boston Scientific manufactures it.
It is currently focused on the commercialization of Quill SRS, a suture product it hopes will help ease its dependence on Taxus.
"Quill continues to be an up and coming product that is not only growing rapidly, but looks to have almost limitless future," Chief Executive William Hunter said during the call.
Excluding items, the company lost 10 cents a share.
Revenue rose 7 percent to $59 million, from sale of its proprietary and base medical products, while royalty revenue more than halved to $7.1 million.
Angiotech shares, which have slumped more than 45 percent since it announced its recapitalization plan, fell 12.5 percent to close at 24.5 Canadian cents on the Toronto Stock Exchange on Tuesday.
($1=$1.00 Canadian) (Additional reporting by Arnika Thakur in Bangalore; editing by Rob Wilson)
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