ontario superior court of justice commercial list in … · 0001 . 2 : notice of application dated...

Court File No. CV-17-584836-00CL

ONTARIO SUPERIOR COURT OF JUSTICE

COMMERCIAL LIST

IN THE MATTER OF AN APPLICATION UNDER SECTION 192 OF THE CANADA BUSINESS CORPORATIONS ACT, R.S.C. 1985, c. C-44, AS AMENDED, AND RULES 14.05(2) AND 14.05(3) OF THE RULES OF CIVIL PROCEDURE AND IN THE MATTER OF A PROPOSED ARRANGEMENT OF CONCORDIA INTERNATIONAL CORP. AND CONCORDIA HEALTHCARE (CANADA) LIMITED AND INVOLVING CONCORDIA LABORATORIES INC., S.A.R.L., CONCORDIA PHARMACEUTICALS INC., S.A.R.L., CONCORDIA INVESTMENTS (JERSEY) LIMITED, CONCORDIA FINANCING (JERSEY) LIMITED, AMDIPHARM HOLDINGS S.A.R.L., AMDIPHARM AG, AMDIPHARM B.V., AMDIPHARM LIMITED, AMDIPHARM MERCURY HOLDCO UK LIMITED, AMDIPHARM MERCURY UK LTD., CONCORDIA HOLDINGS (JERSEY) LIMITED, AMDIPHARM MERCURY INTERNATIONAL LIMITED, CONCORDIA INVESTMENT HOLDINGS (UK) LIMITED, MERCURY PHARMA GROUP LIMITED, CONCORDIA INTERNATIONAL RX (UK) LIMITED, ABCUR AB, MERCURY PHARMACEUTICALS LIMITED, FOCUS PHARMA HOLDINGS LIMITED, FOCUS PHARMACEUTICALS LIMITED, MERCURY PHARMA (GENERICS) LIMITED, MERCURY PHARMACEUTICALS (IRELAND) LIMITED, AND MERCURY PHARMA INTERNATIONAL LIMITED

CONCORDIA INTERNATIONAL CORP. AND CONCORDIA HEALTHCARE (CANADA) LIMITED

Applicants

MOTION RECORD VOLUME 1 OF 2

(Motion for Preliminary Interim Order returnable October 20, 2017)

GOODMANS LLP Barristers & Solicitors Bay Adelaide Centre – West Tower 333 Bay Street, Suite 3400 Toronto, Canada M5H 2S7

Robert J. Chadwick LSUC#: 35165K [email protected] Brendan O’Neill LSUC#: 43331J [email protected] Caroline Descours LSUC#: 58251A [email protected] Ryan Baulke LSUC#: 66189O [email protected] Tel: 416.979.2211 Fax: 416.979.1234 Lawyers for the Applicants

INDEX

Tab Document Page No.

1 Notice of Motion dated October 20, 2017 0001

2 Notice of Application dated October 20, 2017 0008

3 Draft Preliminary Interim Order 0016

4 Affidavit of David Price, sworn October 19, 2017 0026

A Organizational Chart of the Concordia Group 0070

B Secured Term Loan Credit Agreement 0072

C Secured Notes Indenture 0384

D Extended Unsecured Bridge Loan Agreement 0830

E Equity Unsecured Bridge Loan Agreement 0993

F 7.00% Unsecured Notes Indenture 1151

G Press Release dated October 16, 2017 1320

H 9.50% Unsecured Notes Indenture 1324

I DELIVER Management Presentation and Fact Sheet 1500

J Consolidated audited financial statements of Concordia International Corp. for the year ended December 31, 2016

1517

Tab Document Page No.

K Consolidated unaudited financial statements of Concordia International Corp. for the three and six months ended June 30, 2017

1583

L Copy of the letter from the CBCA Director dated October 19, 2017 1626

Court File No. CV-17-584836-OOCL


COMMERCIAL LIST

IN THE MATTER OF AN APPLICATION UNDER SECTION 192 OF THE CANADA BUSINESS CORPORATIONS ACT, R.S.C. 1985, c. C-44, AS AMENDED, AND RULES 14.05(2) AND 14.05(3) OF THE RULES OF CIVIL PROCEDURE

AND IN THE MATTER OF A PROPOSED ARRANGEMENT OF CONCORDIA INTERNATIONAL CORP. AND CONCORDIA HEALTHCARE (CANADA) LIMITED AND INVOLVING CONCORDIA LABORATORIES INC., S.A.R.L., CONCORDIA PHARMACEUTICALS INC., S.A.R.L., CONCORDIA INVESTMENTS (JERSEY) LIMITED, CONCORDIA FINANCING (JERSEY) LIMITED, AMDIPHARM HOLDINGS S.A.R.L., AMDIPHARM AG, AMDIPHARM B.V., AMDIPHARM LIMITED, AMDIPHARM MERCURY HOLDCO UK LIMITED, AMDIPHARM MERCURY UK LTD., CONCORDIA HOLDINGS (JERSEY) LIMITED, AMDIPHARM MERCURY INTERNATIONAL LIMITED, CONCORDIA INVESTMENT HOLDINGS (UK) LIMITED, MERCURY PHARMA GROUP LIMITED, CONCORDIA INTERNATIONAL RX (UK) LIMITED, ABCUR AB, MERCURY PHARMACEUTICALS LIMITED, FOCUS PHARMA HOLDINGS LIMITED, FOCUS PHARMACEUTICALS LIMITED, MERCURY PHARMA (GENERICS) LIMITED, MERCURY PHARMACEUTICALS (IRELAND) LIMITED, AND MERCURY PHARMA INTERNATIONAL LIMITED


Applicants

NOTICE OF MOTION (Motion for Preliminary Interim Order returnable October 20, 2017)

The Applicants, Concordia International Corp. (“CIC”) and Concordia Healthcare

(Canada) Limited (“CHCL”, and together with CIC, the “Applicants”), will make a motion to a

Judge presiding over the Commercial List on October 20, 2017 at 8:00 a.m. or as soon after that

time as the motion can be heard, at 330 University Avenue, Toronto, Ontario.

PROPOSED METHOD OF HEARING: The motion is to be heard orally.

0001

- 2 -

THE MOTION IS FOR:

(a) a preliminary interim order (the “Preliminary Interim Order”) pursuant to

section 192(4) of the Canada Business Corporations Act, R.S.C. 1985, c. C-44, as

amended (the “CBCA”), including a stay of proceedings, substantially in the

same form of the draft Preliminary Interim Order attached as Tab “3” to the

Motion Record; and

(b) such further and other relief as this Court may deem just.

THE GROUNDS FOR THE MOTION ARE:

(a) CHCL is a corporation governed by the CBCA;

(b) CIC is a corporation incorporated under the Business Corporations Act, R.S.O.

1990, c-B.16, as amended, and it is expected that in connection with the

Arrangement (as defined below), CIC will be continued under the CBCA in

advance of the Applicants returning to the Court for a final order approving the

Arrangement;

(c) the Subsidiary Guarantors (as defined below) are corporations established under

the laws of the jurisdictions indicated in Schedule “A” to this Notice of Motion;

(d) the Preliminary Interim Order is in connection with a proposed arrangement (the

“Arrangement”) with respect to the Applicants and involving the direct and

indirect subsidiaries listed on Schedule “A” to this Notice of Motion (the

“Subsidiary Guarantors”, and together with the Applicants, the “Company”),

through which the Company expects to, among other things (i) significantly

reduce the Company’s outstanding indebtedness and annual interest costs, (ii)

improve its capital structure and (iii) put the Company on a strong financial

footing to execute on its long-term growth strategy moving forward;

(e) it is expected that, in connection with the Arrangement, CIC and CHCL will

amalgamate;

0002

- 3 -

(f) the Preliminary Interim Order includes preliminary relief that is necessary to

assist in advancing and finalizing the proposed Arrangement, including a stay of

proceedings;

(g) section 192(4) of the CBCA provides that this Court may make such Orders as it

considers appropriate in connection with a proposed arrangement;

(h) the relief sought in the Preliminary Interim Order is within the scope of

subsection 192 of the CBCA and will enable the Applicants to continue to

effectively and efficiently advance and finalize the terms of the proposed

Arrangement, and the definitive documentation for the proposed Arrangement,

including a plan of arrangement, and to return before the Court on a date to be

scheduled for an interim Order in respect of the Arrangement, the calling of

meetings of the applicable affected stakeholders and other related relief;

(i) rules 1.04, 1.05, 3.02, 14.05, 17.02, 37, 38 and 39 of the Rules of Civil Procedure;

(j) section 192 of the CBCA; and

(k) such further and other grounds as counsel may advise and this Court may permit.

THE FOLLOWING DOCUMENTARY EVIDENCE will be used at the hearing of the

Motion:

(a) the within Notice of Application;

(b) the affidavit of David Price sworn October 19, 2017 and the exhibits attached

thereto; and

(c) such further and other material as counsel may advise and this Court may permit.

0003

- 4 -

October 20, 2017 GOODMANS LLP Barristers & Solicitors 333 Bay Street, Suite 3400 Toronto, Canada M5H 2S7

Robert J. Chadwick (LSUC#: 35165K)

[email protected] Brendan O’Neill (LSUC#: 43331J)

[email protected] Caroline Descours (LSUC#: 58251A)

[email protected] Ryan Baulke (LSUC#: 66189O)

[email protected]

Lawyers for the Applicants

TO: THE DIRECTOR UNDER THE CANADA BUSINESS CORPORATIONS ACT Compliance & Policy Directorate Corporations Canada, Industry Canada 9th Floor, Jean Edmonds Tower South 365 Laurier Avenue West Ottawa, ON, K1A 0C8

AND TO: GOLDMAN SACHS BANK USA, Administrative Agent and Collateral Agent for the Secured Term Loans, Administrative Agent for the Equity Unsecured Bridge Loan, Administrative Agent for the Extended Unsecured Bridge Loan 200 West Street, 16th Floor New York, NY, 10282 Attention: SBD Operations Email: [email protected]

AND TO: U.S. BANK NATIONAL ASSOCIATION, Trustee and Collateral Agent for the Secured Notes, Trustee for the 9.50% Unsecured Notes, Trustee for the 7.00% Unsecured Notes 13737 Noel Road, Suite 800 Dallas, Texas, 75240 For the Secured Notes and 9.50% Unsecured Notes Attention: Damien Daley Email: [email protected] For the 7.00% Unsecured Notes Attention: Global Corporate Trust Services Fax: (972) 581-1660

0004

- 5 -

AND TO: OSLER, HOSKIN & HARCOURT LLP, Advisors to an ad hoc committee of secured debtholders 100 King Street West, Suite 6200 Toronto, Ontario, M5X 1B8 Attention: Marc Wasserman / Martino Calvaruso Email: [email protected] / [email protected]

AND TO: BENNETT JONES LLP, Advisors to an ad hoc committee of unsecured debtholders 3400 One First Canadian Place P.O. Box 130 Toronto, Ontario, M5X 1A4 Attention: Kevin Zych / Sean Zweig Email: [email protected] / [email protected]

AND TO: DAVIS POLK & WARDWELL, Counsel to Goldman Sachs Bank USA in its capacity as Administrative Agent for the Secured Term Loans, Equity Unsecured Bridge Loan and Extended Unsecured Bridge Loan 450 Lexington Avenue New York, NY, 10017 Attention: Damian Schaible Email: [email protected]

0005

SCHEDULE “A”

SUBSIDIARY GUARANTORS

1. Concordia Laboratories Inc., S.a.R.L. – Luxembourg

2. Concordia Pharmaceuticals Inc., S.a.R.L. – Luxembourg

3. Concordia Investments (Jersey) Limited – Jersey

4. Concordia Financing (Jersey) Limited – Jersey

5. Amdipharm Holdings S.a.R.L. – Luxembourg

6. Amdipharm AG – Switzerland

7. Amdipharm B.V. – Netherlands

8. Amdipharm Limited – Ireland

9. Amdipharm Mercury Holdco UK Limited – United Kingdom

10. Amdipharm Mercury UK Ltd. – United Kingdom

11. Concordia Holdings (Jersey) Limited – Jersey

12. Amdipharm Mercury International Limited – Jersey

13. Concordia Investment Holdings (UK) Limited – United Kingdom

14. Mercury Pharma Group Limited – United Kingdom

15. Concordia International Rx (UK) Limited – United Kingdom

16. Abcur AB – Sweden

17. Mercury Pharmaceuticals Limited – United Kingdom

18. Focus Pharma Holdings Limited – United Kingdom

19. Focus Pharmaceuticals Limited – United Kingdom

20. Mercury Pharma (Generics) Limited– United Kingdom

21. Mercury Pharmaceuticals (Ireland) Limited – Ireland

22. Mercury Pharma International Limited – Ireland

0006

IN THE MATTER OF AN APPLICATION UNDER SECTION 192 OF THE CANADA BUSINESS CORPORATIONS ACT, R.S.C. 1985, C. C-44, AS AMENDED, AND RULES 14.05(2) AND 14.05(3) OF THE RULES OF CIVIL PROCEDURE

AND IN THE MATTER OF A PROPOSED ARRANGEMENT OF CONCORDIA INTERNATIONAL CORP. AND CONCORDIA HEALTHCARE (CANADA) LIMITED

Applicants

Court File No. CV-17-584836-OOCL


COMMERCIAL LIST

Proceeding commenced at Toronto

NOTICE OF MOTION

(Motion returnable October 20, 2017) (Preliminary Interim Order)

GOODMANS LLP Barristers & Solicitors 333 Bay Street, Suite 3400 Toronto, Canada M5H 2S7 Robert J. Chadwick LSUC#: 35165K [email protected] Brendan O’Neill LSUC#: 43331J [email protected] Caroline Descours LSUC#: 58251A [email protected] Ryan Baulke LSUC#: 66189O [email protected] Tel: (416) 979-2211 Fax: (416) 979-1234 Lawyers for the Applicants

0007

ONTARIO

SUPERIOR COURT OF JUSTICE

COMMERCIAL LIST

Court File No.LIZ —

CCCL.

IN THE MATTER OF AN APPLICATION UNDER SECTION 192 OFTHE CANADA BUSINESS CORPORATIONS ACT, R.S.C. 1985, c. C-44, ASAMENDED, AND RULES 14.05(2) AND 14.05(3) OF THE RULES OFCIVIL PROCEDURE

AND IN THE MATTER OF A PROPOSED ARRANGEMENT OFCONCORDIA INTERNATIONAL CORP. AND CONCORDIAHEALTHCARE (CANADA) LIMITED AND INVOLVING CONCORDIALABORATORIES INC., S.A.R.L., CONCORDIA PHARMACEUTICALSINC., S.A.R.L., CONCORDIA INVESTMENTS (JERSEY) LIMITED,CONCORDIA FINANCING (JERSEY) LIMITED, AMDIPHARMHOLDINGS S.A.R.L., AMDIPHARM AG, AMDIPHARM B.V.,AMDIPHARM LIMITED, AMDIPHARM MERCURY HOLDCO UKLIMITED, AMDIPHARM MERCURY UK LTD., CONCORDIAHOLDINGS (JERSEY) LIMITED, AMDIPHARM MERCURYINTERNATIONAL LIMITED, CONCORDIA INVESTMENT HOLDINGS(UK) LIMITED, MERCURY PHARMA GROUP LIMITED, CONCORDIAINTERNATIONAL RX (UK) LIMITED, ABCUR AB, MERCURYPHARMACEUTICALS LIMITED, FOCUS PHARMA HOLDINGSLIMITED, FOCUS PHARMACEUTICALS LIMITED, MERCURYPHARMA (GENERICS) LIMITED, MERCURY PHARMACEUTICALS(IRELAND) LIMITED, AND MERCURY PHARMA INTERNATIONALLIMITED

CONCORDIA INTERNATIONAL CORP. AND CONCORDIA HEALTHCARE(CANADA) LIMITED

NOTICE OF APPLICATION

TO THE RESPONDENTS:

Applicants

A LEGAL PROCEEDING HAS BEEN COMMENCED by the Applicants. The claimmade by the Applicants appears on the following page.

THIS APPLICATION will come on for hearing before a Judge presiding over theCommercial List on dates to be set by the Court, at 330 University Avenue, Toronto, Ontario, on

0008

notice to the parties listed below and any other party that properly submits a notice of appearancein accordance with the following paragraph.

IF YOU WISH TO OPPOSE THIS APPLICATION, to receive notice of any step inthe application or to be served with any documents in the application, you or an Ontario lawyeracting for you must forthwith prepare a notice of appearance in Form 38A prescribed by theRules of Civil Procedure, serve it on the Applicants' lawyer or, where the Applicants do not havea lawyer, serve it on the Applicants, and file it, with proof of service, in this court office, and youor your lawyer must appear at the hearing.

IF YOU WISH TO PRESENT AFFIDAVIT OR OTHER DOCUMENTARYEVIDENCE TO THE COURT OR TO EXAMINE OR CROSS-EXAMINE WITNESSESON THE APPLICATION, you or your lawyer must, in addition to serving your notice ofappearance, serve a copy of the evidence on the Applicants' lawyer or, where the Applicants donot have a lawyer, serve it on the Applicants, and file it, with proof of service, in the court officewhere the application is to be heard as soon as possible, but not later than 2 p.m. on the daybefore the hearing, or as otherwise ordered by the Court.

IF YOU FAIL TO APPEAR AT THE HEARING, JUDGMENT MAY BE GIVENIN YOUR ABSENCE AND WITHOUT FURTHER NOTICE TO YOU. IF YOU WISHTO OPPOSE THIS APPLICATION BUT ARE UNABLE TO PAY LEGAL FEES,LEGAL AID MAY BE AVAILABLE TO YOU BY CONTACTING A LOCAL LEGALAID OFFICE.

Date October 20, 2017 Issued by

stray

Nateleha Browns. nr

Address of 330 niversity Avenuecourt office Toronto, Ont. io M5G 1E7

TO: THE DIRECTOR UNDER THE CANADA BUSINESSCORPORATIONS ACTCompliance & Policy DirectorateCorporations Canada, Industry Canada9th Floor, Jean Edmonds Tower South365 Laurier Avenue WestOttawa, ON, K1A 008

0009

AND TO: GOLDMAN SACHS BANK USA, Administrative Agent and CollateralAgent for the Secured Term Loans, Administrative Agent for the EquityUnsecured Bridge Loan, Administrative Agent for the Extended UnsecuredBridge Loan200 West Street, 16th FloorNew York, NY, 10282Attention: SBD OperationsEmail: [email protected]

AND TO: U.S. BANK NATIONAL ASSOCIATION, Trustee and Collateral Agent forthe Secured Notes, Trustee for the 9.50% Unsecured Notes, Trustee for the7.00% Unsecured Notes13737 Noel Road, Suite 800Dallas, Texas, 75240For the Secured Notes and 9.50% Unsecured Notes Attention: Damien DaleyEmail: [email protected] the 7.00% Unsecured Notes Attention: Global Corporate Trust ServicesFax: (972) 581-1660

AND TO: OSLER, HOSKIN & HARCOURT LLP, Advisors to an ad hoc committee ofsecured debtholders100 King Street West, Suite 6200Toronto, Ontario, M5X 1B8Attention: Marc Wasserman / Martino CalvarusoEmail: [email protected] / [email protected]

AND TO: BENNETT JONES LLP, Advisors to an ad hoc committee of unsecureddebtholders3400 One First Canadian PlaceP.O. Box 130Toronto, Ontario, M5X 1A4Attention: Kevin Zych / Sean ZweigEmail: [email protected] / [email protected]

AND TO: DAVIS POLK & WARDWELL, Counsel to Goldman Sachs Bank USA in itscapacity as Administrative Agent for the Secured Term Loans, EquityUnsecured Bridge Loan and Extended Unsecured Bridge Loan450 Lexington AvenueNew York, NY, 10017Attention: Damian SchaibleEmail: [email protected]

0010

APPLICATION

1. THE APPLICANTS MAKE AN APPLICATION FOR:

a) a preliminary interim order (the "Preliminary Interim Order") pursuant to

section 192(4) of the Canada Business Corporations Act, R.S.C. 1985, c. C-44, as

amended (the "CBCA") in connection with a proposed arrangement (the

"Arrangement") with respect to Concordia International Corp. ("CIC") and

Concordia Healthcare (Canada) Limited ("CHCL" and, together with CIC, the

"Applicants") and involving the direct and indirect subsidiaries listed on

Schedule "A" to this Notice of Application (the "Subsidiary Guarantors", and

together with the Applicants, the "Company"), including a stay of proceedings;

b) an interim order pursuant to section 192(4) of the CBCA to address the calling,

holding and conducting of meetings of the affected stakeholders to consider the

Arrangement and other related relief (an "Interim Order");

c) a final order approving the Arrangement pursuant to sections 192(3) and 192(4) of

the CBCA (a "Final Order"); and

d) such further and other relief as this Court may deem just.

2. THE GROUNDS FOR THE APPLICATION ARE:

a) CHCL is a corporation governed by the CBCA;

b) CIC is a corporation incorporated under the Business Corporations Act, R.S.O.

1990, c-B.16, as amended, and it is expected that in connection with the

Arrangement, CIC will be continued under the CBCA in advance of the

Applicants returning to the Court for a final order approving the Arrangement;

c) it is expected that, in connection with the Arrangement, CIC and CHCL will

amalgamate;

d) the Subsidiary Guarantors are corporations established under the laws of the

jurisdictions indicated in Schedule "A" to this Notice of Application;

0011

e) the Applicants wish to effect fundamental changes in the nature of an arrangement

under the provisions of the CBCA;

f) all statutory requirements under section 192 of the CBCA have been or will have

been satisfied by the hearing of the within Application;

it is not practicable for the Applicants to effect the Arrangement under any other

provision of the CBCA;

h) the Application has been put forward in good faith and is in the best interests of

the Applicants and the stakeholders of the Applicants;

i) the requested provisions of the Preliminary Interim Order relating to a stay of

proceedings are within the scope of subsection 192(4) of the CBCA and are

reasonable in the circumstances;

i) the directions set forth in the Preliminary Interim Order (if granted), the Interim

Order (if granted), and the requisite approval of the affected stakeholders will be

followed and obtained by the hearing of the within Application;

this Notice of Application and the Preliminary Interim Order (if granted) will be

sent to all of those listed in this Notice of Application;

1) certain of the debtholders and shareholders of the Company are resident outside of

Ontario and will be served pursuant to the terms of any Preliminary Interim Order

or other order for advice and directions granted by this Court and rules 17.02(n)

and 17.02(o) of the Rules of Civil Procedure;

m) rules 1.04, 1.05, 3.02, 14.05, 17.02, 37, 38 and 39 of the Rules of Civil Procedure;

n) section 192 of the CBCA; and

o) such further and other grounds as counsel may advise and this Court may permit.

0012

3. THE FOLLOWING DOCUMENTARY EVIDENCE will be used at the hearing of the

Application:

a) the affidavit of David Price sworn October 19, 2017, and the exhibits thereto;

b) any further affidavits to be sworn on behalf of the Applicants, with exhibits

thereto, in connection with a motion for an Interim Order and a motion for a Final

Order;

c) such further and other material as counsel may advise and this Court may permit.

October 20, 2017 GOODMANS LLPBarristers & Solicitors333 Bay Street, Suite 3400Toronto, Canada M5H 2S7

Robert J. Chadwick (LSUC#: 35165K)[email protected]

Brendan O'Neill (LSUC#: 43331J)[email protected]

Caroline Descours (LSUC#: 58251A)cdescours@goodmans ca

Ryan Baulke (LSUC#: 661890)[email protected]

Tel: (416) 979-2211Fax: (416) 979-1234


0013

SCHEDULE "A"

SUBSIDIARY GUARANTORS

1. Concordia Laboratories Inc., S.a.R.L. — Luxembourg

2. Concordia Pharmaceuticals Inc., S.a.R.L. — Luxembourg

3. Concordia Investments (Jersey) Limited — Jersey

4. Concordia Financing (Jersey) Limited — Jersey

5. Amdipharm Holdings S.a.R.L. — Luxembourg

6. Amdipharm AG — Switzerland

7. Amdipharm B.V. — Netherlands

8. Amdipharm Limited — Ireland

9. Amdipharm Mercury Holdco UK Limited — United Kingdom

10. Amdipharm Mercury UK Ltd. — United Kingdom

11. Concordia Holdings (Jersey) Limited — Jersey

12. Amdipharm Mercury International Limited — Jersey

13. Concordia Investment Holdings (UK) Limited — United Kingdom

14. Mercury Pharma Group Limited — United Kingdom

15. Concordia International Rx (UK) Limited — United Kingdom

16. Abcur AB — Sweden

17. Mercury Pharmaceuticals Limited — United Kingdom

18. Focus Pharma Holdings Limited — United Kingdom

19. Focus Pharmaceuticals Limited — United Kingdom

20. Mercury Pharma (Generics) Limited— United Kingdom

21. Mercury Pharmaceuticals (Ireland) Limited — Ireland

22. Mercury Pharma International Limited — Ireland

0014

IN THE MATTER OF AN APPLICATION UNDER SECTION 192 OF THE CANADABUSINESS CORPORATIONS ACT, R.S.C. 1985, C. C-44, AS AMENDED, AND RULES14.05(2) AND 14.05(3) OF THE RULES OF CIVIL PROCEDURE

AND IN THE MATTER OF A PROPOSED ARRANGEMENT OF CONCORDIAINTERNATIONAL CORP. AND CONCORDIA HEALTHCARE (CANADA) LIMITED

Applicants

Court File No.

C\H

ONTARIOSUPERIOR COURT OF JUSTICE

COMMERCIAL LIST

Proceeding commenced at Toronto

NOTICE OF APPLICATION

GOODMANS LLPBarristers & Solicitors333 Bay Street, Suite 3400Toronto, Canada M5H 2S7

Robert J. Chadwick LSUC#: [email protected] O'Neill LSUC#: [email protected] Descours LSUC#: [email protected] Baulke LSUC#: [email protected]

Tel: (416) 979-2211Fax: (416) 979-1234


0015

DR

AFT

: 1



COMMERCIAL LIST

THE HONOURABLE REGIONAL

SENIOR JUSTICE MORAWETZ

) ) )

FRIDAY, THE 20TH

DAY OF OCTOBER, 2017

IN THE MATTER OF AN APPLICATION UNDER SECTION 192 OF THE CANADA BUSINESS CORPORATIONS ACT, R.S.C. 1985, C. C-44, AS AMENDED, AND RULES 14.05(2) AND 14.05(3) OF THE RULES OF CIVIL PROCEDURE


PRELIMINARY INTERIM ORDER

THIS MOTION made by Concordia International Corp. (“CIC”) and Concordia

Healthcare (Canada) Limited (together with CIC, the “Applicants”), for a preliminary interim

order in connection with an arrangement (the “Arrangement”) pursuant to section 192 of the

Canada Business Corporations Act, R.S.C. 1985, c. C-44, as amended, (the “CBCA”),

0016

DR

AFT

: 1

including a stay of proceedings, was heard this day at 330 University Avenue, Toronto,

Ontario.

ON READING the Notice of Motion, the Notice of Application issued on October 20,

2017, and the affidavit of David Price sworn October 19, 2017, together with the exhibits

attached thereto, and on hearing the submissions of counsel for the Applicants.

Definitions

1. THIS COURT ORDERS that for the purposes of this Order capitalized terms used

herein but not defined have the meanings set forth in Schedule A.

Stay of Proceedings

2. THIS COURT ORDERS that, subject to paragraph 3 of this Order, from 12:01 a.m.

(Toronto time) on the date of this Order and until further order of the Court, no right, remedy or

proceeding, including, without limitation, any right to terminate, demand, accelerate, set off,

amend, declare in default or take any other action under or in connection with any loan, note,

commitment, contract or other agreement, at law or under contract, may be exercised,

commenced or proceeded with by: (i) any of the Secured Debtholders; (ii) any of the

Unsecured Debtholders; (iii) any administrative agent, collateral agent, indenture trustee or

similar person in respect of the Secured Debt and/or Unsecured Debt; or (iv) any person that is

party to or a beneficiary of any other loan, note, commitment, contract or other agreement with

one or more of the Concordia Entities, against or in respect of any of the Concordia Entities, or

any of the present or future property, assets, rights or undertakings of any of the Concordia

Entities, of any nature in any location, whether held directly or indirectly by any of the

Concordia Entities, by reason or as a result of:

0017

DR

AFT

: 1

a) any of the Applicants having made an application to this Court pursuant to

Section 192 of the CBCA;

b) any of the Applicants or Subsidiary Guarantors being a party to or involved in

these proceedings or the Arrangement;

c) any of the Applicants or Subsidiary Guarantors taking any step contemplated by

or related to these proceedings or the Arrangement;

d) the non-payment of principal, interest and any other amounts due and payable in

respect of any of the Unsecured Debt, or the expiry of any applicable grace

periods in respect of any of the Unsecured Debt; or

e) any default or cross-default under any of the Secured Debt (except in respect of

any non-payment of scheduled payments of interest (at non-default rates) or

amortization, as applicable, under the Secured Debt, for certainty, without

giving effect to any acceleration under the Secured Debt) or the Unsecured

Debt,

in each case except with the prior consent of the Applicants or leave of this Court.

3. THIS COURT ORDERS that, notwithstanding any other provision of this Order, no

person shall be prohibited from taking any actions on the same basis as is permitted under

section 34(8) of the CCAA.

0018

DR

AFT

: 1

Notice of Proceedings

4. THIS COURT ORDERS that, subject to further order of this Court, the only persons

entitled to notice of and to appear and be heard at subsequent motions within these proceedings

shall be:

a) the Applicants and the other Concordia Entities and their counsel;

b) counsel to each of the Secured Debtholder Committee and the Unsecured

Debtholder Committee;

c) the Agent and the Trustee and their respective legal counsel;

d) the CBCA Director; and

e) any interested person who has served and filed a Notice of Appearance in

accordance with this Order and the Rules of Civil Procedures.

5. THIS COURT ORDERS that any Notice of Appearance served in these proceedings

shall be served on the solicitors for the Applicants as soon as reasonably practicable at the

following address:

Goodmans LLP 333 Bay Street, Suite 3400 Toronto, ON M5H 2S7

Attention: Robert J. Chadwick, Brendan O’Neill and Caroline Descours Email: [email protected] / [email protected] /[email protected]

6. THIS COURT ORDERS that the requirement for service of the Notice of Motion is

hereby dispensed with and that this Motion is properly returnable today.

0019

DR

AFT

: 1

Comeback Hearing

7. THIS COURT ORDERS that any interested party that wishes to amend or vary this

Order shall be entitled bring a motion before this Court on seven business days’ notice to the

Applicants and any other party or parties likely to be affected by the order to be sought by such

interested party.

E-Service Protocol

8. THIS COURT ORDERS that the E-Service Guide of the Commercial List (the

“Guide”) is approved and adopted by reference herein and, in this proceeding, the service of

documents made in accordance with the Guide (which can be found on the Commercial List

website at http://www.ontariocourts.ca/scj/practice/practice-directions/toronto/eservice-

commercial/) shall be valid and effective service. Subject to Rule 17.05 this Order shall

constitute an order for substituted service pursuant to Rule 16.04 of the Rules of Civil

Procedure. Subject to Rule 3.01(d) of the Rules of Civil Procedure and paragraph 13 of the

Guide, service of documents in accordance with the Guide will be effective on transmission.

9. THIS COURT ORDERS that if the service or distribution of documents in accordance

with the Guide is not practicable, the Applicants are at liberty to serve or distribute this Order,

any other materials and orders in these proceedings, any notices or other correspondence, by

forwarding true copies thereof by prepaid ordinary mail, courier, personal delivery or facsimile

transmission to interested parties at their respective addresses as last shown on the records of

the Applicants and that any such service or distribution by courier, personal delivery or

facsimile transmission shall be deemed to be received on the next business day following the

date of forwarding thereof, or if sent by ordinary mail, on the third business day after mailing.

0020

DR

AFT

: 1

10. THIS COURT ORDERS that the Applicants and their respective counsel are at liberty

to serve or distribute this Order, any other materials and orders as may be reasonably required

in these proceedings, including any notices, or other correspondence, by forwarding true copies

thereof by electronic message to interested parties and their advisors, as applicable. For greater

certainty, any such distribution or service shall be deemed to be in satisfaction of a legal or

juridical obligation, and notice requirements within the meaning of clause 3(c) of the Electronic

Commerce Protection Regulations, Reg. 81000-2-175 (SOR/DORS).

Aid and Recognition

11. THIS COURT SEEKS AND REQUESTS the aid and recognition of any court or any

judicial, regulatory or administrative body in any province of Canada and any judicial,

regulatory or administrative tribunal or other court constituted pursuant to the Parliament of

Canada or the legislature of any province and any court or any judicial, regulatory or

administrative body of the United States or other country to act in aid of and to assist this Court

in carrying out the terms of this Order and any other orders entered in connection with these

proceedings.

12. THIS COURT ORDERS that, notwithstanding anything to the contrary herein, neither

the terms of this Order nor the Applicants being a party to or the Subsidiary Guarantors being

involved in these proceedings shall prejudice or preclude the Applicants and any of the

Subsidiary Guarantors from commencing cases under the CCAA, chapter 11 of the United

States Bankruptcy Code, 11. U.S.C. §§ 101 et seq., or their equivalents in other jurisdictions.

0021

DR

AFT

: 1

Schedule A

Additional Defined Terms

a) “Agent” means Goldman Sachs Bank USA, in its capacity as Administrative

Agent and/or Collateral Agent under any of the Secured Debt or Unsecured

Debt, as applicable, and any permitted successors and assigns;

b) “CCAA” means the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-

36, as amended;

c) “Concordia Entities” means, collectively, CIC and all of its direct and indirect

subsidiaries;

d) “Secured Debt” means, collectively, the debt outstanding under: (i) the Credit

and Guaranty Agreement dated October 21, 2015 by and among, inter alia,

Concordia International Corp. (f/k/a Concordia Healthcare Corp.), the

guarantors party thereto, Goldman Sachs Bank USA, as Administrative Agent

and Collateral Agent, and the lenders party thereto; (ii) the Indenture for 9.000%

First Lien Senior Secured Notes Due 2022 dated October 13, 2016 by and

among Concordia International Corp., the guarantors party thereto, and U.S.

Bank National Association, as Trustee and as Collateral Agent; (iii) the

International Swaps and Derivatives Association 2002 Master Agreement dated

as of August 15, 2016, between Goldman Sachs International and Concordia

Investments (Jersey) Limited (the “ISDA”); (iv) the Swap Confirmation entered

into as of August 17, 2016 and November 8, 2016 between Goldman Sachs

0022

DR

AFT

: 1

International and Concordia Investments (Jersey) Limited in accordance with

the ISDA; and (v) all related documentation, including, without limitation, all

guarantee and security documentation, related to the foregoing;

e) “Secured Debtholder Committee” means the ad hoc committee of debtholders

comprised of certain holders of Secured Debt represented by the Secured

Debtholder Committee Representatives;

f) “Secured Debtholder Committee Representatives” means Osler, Hoskin &

Harcourt LLP and White & Case LLP;

g) “Secured Debtholders” means, collectively, the holders of the Secured Debt;

h) “Subsidiary Guarantors” means, collectively, all of the Concordia Entities that

are guarantors in respect of the Secured Debt and/or Unsecured Debt;

i) “Trustee” means U.S. Bank National Association, in its capacity as Trustee

under any of the Secured Debt or Unsecured Debt, as applicable, and any

permitted successors and assigns;

j) “Unsecured Debt” means, collectively, the debt outstanding under: (i) the

Indenture for 7.000% Senior Unsecured Notes Due 2023 dated April 21, 2015

by and among Concordia International Corp. (f/k/a Concordia Healthcare

Corp.), the guarantors party thereto, and U.S. Bank National Association, as

Trustee; (ii) the Indenture for 9.500% Senior Unsecured Notes Due 2022 dated

October 21, 2015 by and among Concordia International Corp. (f/k/a Concordia

Healthcare Corp.), the guarantors party thereto, and U.S. Bank National

0023

DR

AFT

: 1

Association, as Trustee; (iii) the Two Year Equity Bridge Credit and Guaranty

Agreement dated October 21, 2015 by and among, inter alia, Concordia

International Corp. (f/k/a Concordia Healthcare Corp.), the guarantors party

thereto, Goldman Sachs Bank USA, as Administrative Agent, and the lenders

from time to time party thereto; (iv) the Extended Equity Bridge Credit and

Guaranty Agreement dated October 21, 2015 by and among, inter alia,

Concordia International Corp. (f/k/a Concordia Healthcare Corp.), the

guarantors party thereto, Goldman Sachs Bank USA, as Administrative Agent,

and the lenders party thereto; and (v) all related documentation, including,

without limitation, all guarantee documentation, related to the foregoing;

k) “Unsecured Debtholder Committee” means the ad hoc committee of

debtholders comprised of certain holders of Unsecured Debt represented by the

Unsecured Debtholder Committee Representatives;

l) “Unsecured Debtholder Committee Representatives” means Bennett Jones

LLP, Paul, Weiss, Rifkind, Wharton & Garrison LLP, and Ashurst LLP; and

m) “Unsecured Debtholders” means, collectively, the holders of the Unsecured

Debt.

0024

DR

AFT

: 1

GOODMANS\6743270

IN THE MATTER OF AN APPLICATION UNDER SECTION 192 OF THE CANADA BUSINESS CORPORATIONS ACT, R.S.C. 1985, C. C-44, AS AMENDED, AND RULES 14.05(2) AND 14.05(3) OF THE RULES OF CIVIL PROCEDURE AND IN THE MATTER OF A PROPOSED ARRANGEMENT OF CONCORDIA INTERNATIONAL CORP. AND CONCORDIA HEALTHCARE (CANADA) LIMITED

Court File No: CV-17-584836-00CL

ONTARIO SUPERIOR COURT OF JUSTICE-

COMMERCIAL LIST Proceeding commenced at Toronto

PRELIMINARY INTERIM ORDER

GOODMANS LLP Barristers & Solicitors 333 Bay Street, Suite 3400 Toronto, Canada M5H 2S7 Robert J. Chadwick LSUC#: 35165K [email protected] Brendan O’Neill LSUC#: 43331J [email protected] Caroline Descours LSUC#: 58251A [email protected] Ryan Baulke LSUC#: 66189O [email protected] Tel: (416) 979-2211 Fax: (416) 979-1234 Lawyers for the Applicants

0025



COMMERCIAL LIST




Applicants

AFFIDAVIT OF DAVID PRICE (sworn October 19, 2017)

0026

( i )

TABLE OF CONTENTS

I. OVERVIEW .......................................................................................................................3

II. BACKGROUND REGARDING THE COMPANY .......................................................7

(a) Corporate Structure ..................................................................................................7

(b) History of the Company ...........................................................................................8

(c) Overview of the Company’s Business ...................................................................11

(d) Business Challenges...............................................................................................17

(e) Capital Structure ....................................................................................................21

(f) Equity Incentive Plans ...........................................................................................30

III. BACKGROUND TO THE ARRANGEMENT AND THE RECAPITALIZATION TRANSACTION ..........................................................................................................................32

(a) The 2016 Strategic Review ....................................................................................32

(b) 2017 Long-Term Growth Strategy.........................................................................32

(c) Development of the Recapitalization Transaction .................................................35

IV. REASONS FOR PROCEEDING BY WAY OF A CBCA PLAN OF ARRANGEMENT .......................................................................................................................38

(a) CHCL is Solvent and, Following the Completion of the Recapitalization Transaction, the Applicants will be Solvent ......................................................................38

(b) It is Not Practicable to Proceed in Another Manner ..............................................39

V. THE PRELIMINARY INTERIM ORDER...................................................................39

(a) The Stay of Proceedings ........................................................................................39

(b) Notice to CBCA Director.......................................................................................41

VI. CONCLUSION ................................................................................................................41

0027

Court File No. ___________________


COMMERCIAL LIST




Applicants

AFFIDAVIT OF DAVID PRICE (sworn October 19, 2017)

I, David Price of the city of Toronto, in the Province of Ontario, MAKE OATH AND SAY:

1. I am the Chief Financial Officer of Concordia International Corp. (“CIC”) and a director

and the Chief Financial Officer and Secretary of Concordia Healthcare (Canada) Limited

(“CHCL” and, together with CIC, the “Applicants”). I joined CIC as Chief Financial Officer on

0028

- 2 -

May 15, 2017, and I have knowledge of the matters deposed to herein. Where I have relied upon

other sources of information, I have stated the source of that information and I believe such

information to be true. The Applicants do not, and do not intend to, waive privilege by any

statement herein.

2. I swear this affidavit in support of an application by the Applicants for a proposed

arrangement (the “Arrangement”) pursuant to section 192 of the Canada Business Corporations

Act, R.S.C. 1985, c. C-44, as amended (the “CBCA”) and for an order pursuant to section 192(4)

of the CBCA substantially in the form to be attached as Tab 3 to the Applicants’ Motion Record

(the “Preliminary Interim Order”), which shall, among other things:

(a) provide a stay of proceedings in respect of the Applicants and the other entities

in the Concordia Group (as defined below) on the terms set out in the proposed

Preliminary Interim Order;

(b) deem service of the motion for the Preliminary Interim Order to be good and

sufficient;

(c) set out the persons entitled to notice of, and to appear and be heard in, the

Arrangement proceedings;

(d) provide for a comeback hearing permitting any interested party that wishes to

amend or vary the Preliminary Interim Order to bring a motion before the Court

on seven business days’ notice to the Applicants and any other party or parties

likely to be affected by the order to be sought by such interested party; and

(e) such further and other relief as this Court deems just.

0029

- 3 -

3. Unless otherwise stated, all monetary amounts contained herein are expressed in U.S.

dollars.

I. OVERVIEW

4. As described in further detail below, CIC, together with its subsidiaries (collectively, the

“Concordia Group” or the “Company”), is a diverse, international specialty pharmaceutical

company primarily focused on off-patent pharmaceutical products. The Concordia Group has an

international footprint with sales in more than 90 countries, and has a diversified portfolio of

more than 200 established, off-patent products. CIC’s common shares (the “Common Shares”)

are listed for trading on the Toronto Stock Exchange (the “TSX”) under the symbol “CXR” and

the NASDAQ Global Select Market (the “NASDAQ”) under the symbol “CXRX”.

5. The purpose of the Arrangement is to give effect to a recapitalization transaction (the

“Recapitalization Transaction”) involving the Secured Term Loans, the Secured Notes, the

Secured FX Swaps, the Unsecured Bridge Loans and the Unsecured Notes (each as defined

below, and collectively, the “Affected Debt” and the documents governing and/or related to the

Affected Debt, the “Affected Debt Instruments”) and the Common Shares.

6. In addition to the Applicants, these proceedings also involve the entities listed on

Schedule “A” hereto (collectively, the “Subsidiary Guarantors”), each of which is a wholly-

owned direct or indirect subsidiary of CIC. The Subsidiary Guarantors collectively own a

significant portion of the assets of the Company’s business and are guarantors under the Affected

Debt Instruments.

0030

- 4 -

7. In early 2017, the Company engaged in a process to develop a long-term growth strategy

to address certain business challenges facing the Company and improve its capital structure, with

debt reduction as a priority. This process led to the development of a five-year strategic plan

known as the DELIVER Strategy.

8. A key component of the DELIVER Strategy is the strengthening of the Company’s

financial foundation by right-sizing its capital structure. In June of 2017, the Company engaged

Perella Weinberg Partners LP (“PWP”) to provide the Company with financial advisory services

in connection with the development and execution of its long-term growth strategy. These

services include, but are not limited to, helping the Company explore and evaluate potential

transactional alternatives, including initiatives to optimize its capital structure.

9. In the summer of 2017, the Company and its advisors commenced discussions regarding

transactions to improve the Company’s capital structure with (i) a committee comprised of

certain Secured Term Loan Lenders and certain Secured Noteholders (each as defined below)

(the “Secured Debtholders Committee”), (ii) a committee comprised of certain Unsecured

Noteholders (as defined below) (the “Unsecured Debtholders Committee” and, together with

the Secured Debtholders Committee, the “Debtholder Committees”), and (iii) each of the

respective legal and financial advisors for the Secured Debtholders Committee (the “Secured

Debtholder Committee Advisors”) and for the Unsecured Debtholders Committee (the

“Unsecured Debtholder Committee Advisors” and, together with the Secured Debtholder

Committee Advisors, the “Debtholder Committee Advisors”).

10. Since the summer of 2017, the Company and its advisors have been engaged in

discussions with the Debtholder Committees and the Debtholder Committee Advisors in

0031

- 5 -

connection with the potential Recapitalization Transaction. The Company has entered into

confidentiality agreements with the Debtholder Committee Advisors. The Company has also

executed engagement letters with the legal advisors to the Secured Debtholders Committee and

the Unsecured Debtholders Committee in which it has agreed to pay the reasonable fees and

expenses of these advisors in connection with the potential Recapitalization Transaction.

11. The Company believes that it needs to reduce its debt obligations in order to have a

sustainable capital structure. The Company’s view is that, based on the size and nature of its

existing capital structure, an arrangement is required to reduce its debt obligations. The

Company and its advisors are continuing to work to advance and finalize the terms of the

Recapitalization Transaction on a consensual basis with the Debtholder Committees and the

Debtholder Committee Advisors. It is the Company’s expectation under the Recapitalization

Transaction to reduce the Company’s outstanding indebtedness by more than $2 billion in the

aggregate, significantly reduce its annual interest costs, improve its capital structure and put the

Company on a strong financial footing in order to execute on its long-term growth strategy

moving forward.

12. As described in greater detail below, CIC did not make its October 7.00% Unsecured

Notes Payment (as defined below) due on October 16, 2017 and does not intend to make the

October Unsecured Bridge Loan Payments (as defined below) due on October 20 and 23, 2017 at

this time as the foregoing payments form part of the Affected Debt that is expected to be affected

under the Recapitalization Transaction.

13. The Company intends to continue to satisfy in the ordinary course its scheduled interest

and amortization payments, as applicable, under the Secured Debt and all of its trade and

0032

- 6 -

employee obligations. As at September 30, 2017, the Company had approximately $342 million

of cash on hand, giving it sufficient liquidity to satisfy these obligations. With the exception of

the October Unsecured Debt Payments (as defined below), the Company is otherwise current on

its payment obligations under all of the Affected Debt and is not, other than in connection with

the commencement of these proceedings and the non-payment of the October Unsecured Debt

Payments, otherwise in default under any of the Affected Debt Instruments.

14. The Applicants require the Preliminary Interim Order and the stay of proceedings

contemplated therein (the “Stay of Proceedings”) to maintain the overall stability for their

business and provide the Company and the Debtholder Committees with a meaningful

opportunity to continue to advance and finalize the terms of the Recapitalization Transaction.

With the benefit of the Stay of Proceedings, the Applicants will have the stability needed to

finalize and execute the Recapitalization Transaction, the Support Agreements (as defined

below) and all other documentation required to implement the Recapitalization and the

Arrangement.

15. The Applicants are continuing to negotiate the terms of the Recapitalization Transaction

and proposed Arrangement with the Debtholder Committees. Upon finalizing these terms, the

Applicants intend to bring forward a motion for an interim order for purposes of, among other

things, calling and holding meetings to vote on the proposed Arrangement (the “Interim

Order”). It is anticipated that, as part of the process to develop the Arrangement and the

Recapitalization Transaction contemplated thereby, the Applicants would enter into definitive

support agreements with the members of the Debtholder Committees (the “Support

Agreements”) prior to returning to Court to seek the Interim Order.

0033

- 7 -

II. BACKGROUND REGARDING THE COMPANY

(a) Corporate Structure

(i) CIC

16. CIC is the parent corporation of the Concordia Group. A corporate chart showing the

structure of the Company is attached as Exhibit “A”.

17. CIC is a corporation formed pursuant to the Ontario Business Corporations Act (the

“OBCA”) having its registered and head office at 277 Lakeshore Rd. East, Suite 302, Oakville,

Ontario, L6J 1H9 and its records office at 333 Bay St., Suite 2400, Toronto, Ontario M56 2T6.

18. In connection with the Recapitalization Transaction, it is anticipated that CIC will

continue from the OBCA to the CBCA prior to the date that the Applicants seek a final order

approving the Arrangement pursuant to a plan of arrangement (the “Plan of Arrangement”).

(ii) CHCL

19. CHCL is a corporation incorporated pursuant to the CBCA having its registered and head

office at 277 Lakeshore Rd. East, Suite 302, Oakville, Ontario, L6J 1H9.

20. CHCL is a direct wholly-owned subsidiary of CIC and does not carry on any operations

or have any liabilities.

(iii) The Subsidiary Guarantors and the Other Subsidiaries

21. The Company operates its global business through a number of direct and indirect

subsidiaries of CIC around the world. Each of the Subsidiary Guarantors is organized under the

0034

- 8 -

laws of the jurisdiction set forth beside its name on Schedule “A” hereto. In addition to CHCL

and the Subsidiary Guarantors, CIC has a number of other subsidiaries around the world that are

not involved in these proceedings and are not guarantors under the Affected Debt Instruments.

(b) History of the Company

22. CIC was incorporated on January 20, 2010 as “Mercari Acquisition Corp.” Mercari

Acquisition Corp. completed an initial public offering on May 6, 2010 and was listed on the TSX

Venture Exchange as a capital pool company. On December 18, 2013, Mercari Acquisition Corp.

changed its name to “Concordia Healthcare Corp.” and, on December 20, 2013, completed a

qualifying transaction (the “Qualifying Transaction”) by way of a reverse takeover by the

shareholders of Concordia Healthcare Inc. (“Concordia Private Co.”). Prior to the Qualifying

Transaction, Mercari Acquisition Corp. did not own any assets other than cash and had not

conducted any active business operations. Following completion of the Qualifying Transaction,

the Common Shares began trading on the TSX and, subsequently, the NASDAQ.

23. On January 1, 2016, Concordia Private Co. amalgamated with Concordia Healthcare

Corp. The amalgamated entity’s name remained Concordia Healthcare Corp. until June 27, 2016,

when it was changed to Concordia International Corp.

24. Since completing the Qualifying Transaction in 2013, the Company has established its

pharmaceutical product portfolio through a number of significant acquisitions. Certain of the

Company’s material acquisitions are described below.

0035

- 9 -

(i) Legacy Products Acquisition

25. In May of 2013, Concordia Pharmaceuticals Inc., S.à.R.L. (“CPI”), one of the Subsidiary

Guarantors, acquired certain rights to certain legacy pharmaceutical products from Shionogi Inc.

(“Shionogi”). The product rights acquired from Shionogi were comprised of three drugs

approved by the United States Food and Drug Administration (the “FDA”): (i) Kapvay®, which

is used to treat Attention Deficit Hyperactivity Disorder; (ii) Orapred ODT®, an anti-

inflammatory used in the treatment of certain pulmonary diseases such as asthma; and (iii)

Ulesfia®, which is a topical treatment for pediculosis (head lice). The consideration payable to

Shionogi for these legacy pharmaceutical product rights included cash on closing and certain

post-closing royalty payments by CPI.

(ii) Photofrin® Acquisition

26. In December of 2013, Concordia Private Co., through its subsidiaries, acquired 100% of

the shares of Pinnacle Biologics, Inc. and its affiliates (collectively, “Pinnacle”). Through this

acquisition, the Concordia Group acquired the rights to the drug Photofrin®, which is used to

treat certain forms of rare cancer and may have potential through further development to be used

to treat additional conditions. The consideration payable for the acquisition of Pinnacle included

cash consideration payable on closing, common shares of Concordia Private Co. and annual

fixed and contingent post-closing cash payments.

(iii) Donnatal® Acquisition

27. In May of 2014, CPI completed the acquisition of the drug Donnatal® from PBM

Pharmaceuticals Inc. Donnatal® is an adjunctive therapy in the treatment of irritable bowel

0036

- 10 -

syndrome and acute enterocolitis. The consideration payable for the acquisition of Donnatal®

was comprised of a combination of cash consideration and Common Shares.

(iv) Zonegran® Acquisition

28. In September of 2014, CPI acquired certain rights to market Zonegran® in the United

States from Eisai, Inc. for cash consideration. Zonegran® is an antiepileptic first approved by the

FDA in March 2000. The consideration payable for the acquisition of certain rights to market

Zonegran® in the United States was comprised of cash consideration.

(v) Covis Portfolio Acquisition

29. In April of 2015, CPI completed the acquisition of substantially all of the commercial

assets of Covis Pharma S.à.r.l and Covis Injectables S.à.r.l. (collectively, “Covis”) for $1.2

billion in cash (the “Covis Acquisition”). The drug portfolio acquired from Covis (the “Covis

Portfolio”) consisted of branded products and authorized generic pharmaceutical contracts

which treat various medical conditions in various areas including cardiovascular, central nervous

system, oncology and acute care markets. The consideration payable for the acquisition of the

Covis Portfolio was comprised of cash consideration.

(vi) AMCo Acquisition

30. In October of 2015, the Company completed its acquisition (the “AMCo Acquisition”)

of Amdipharm Mercury Limited (“AMCo”) from Cinven Capital Management (V) General

Partner Limited and its associated limited partnerships (collectively, “Cinven”) and certain other

vendors. The AMCo Acquisition provided the Company with entry into new areas such as

endocrinology, neurology, ophthalmology and urology. The purchase price for the AMCo

0037

- 11 -

Acquisition was satisfied through a combination of cash consideration and Common Shares. In

addition, the AMCo Acquisition required the Company to make certain post-closing earn-out

payments to Cinven and the other vendors.

(c) Overview of the Company’s Business

31. The Company is a diverse, international specialty pharmaceutical company primarily

focused on off-patent pharmaceutical products. The Company generates revenue through the sale

of a diversified portfolio of more than 200 established, off-patent products in more than 90

countries.

32. The Company specializes in the acquisition, licensing and development of off-patent

prescription medicine products, many of which are niche, hard to make products. The Company

operates through a business model that focuses on the registration and regulatory maintenance of

acquired and in-licensed products, with products being manufactured through an out-sourced

manufacturing network of contract manufacturing organizations (“CMOs”). This structure

allows the Company to avoid fixed research and development and manufacturing infrastructure

costs and provides the Company with an efficient and variable cost structure.

33. The Concordia Group is managed from its head office in Oakville, Ontario. Corporate-

level decision making for the Concordia Group is undertaken by the executive management of

CIC, which are located at the Oakville office. In addition, a substantial portion of the

administrative functions of the Company, including general accounting, financial reporting,

budgeting, legal, global tax planning, interacting with the TSX and NASDAQ, managing aspects

of human resources, and certain medical regulatory activities, are conducted out of the Oakville

office.

0038

- 12 -

34. The Company has two operating segments, in addition to its corporate cost centre in

Oakville, Ontario and its Centre of Excellence in Mumbai, India (described below): (i) the

Company’s international pharmaceutical segment selling branded and generic prescription

products that are sold to wholesalers, hospitals and pharmacies in over 90 countries (“Concordia

International”) and (ii) the Company’s North American legacy pharmaceutical segment, which

also includes its orphan drugs business (“Concordia North America”). Concordia International

and Concordia North America receive additional business support from the Company’s Centre of

Excellence located in Mumbai, India (the “Centre of Excellence”). Each of these segments and

the Centre of Excellence is discussed in detail below.

(ii) Concordia International

35. Concordia International is the Company’s international specialty pharmaceutical

segment, owning or licensing a broad portfolio of branded and generic prescription products that

are sold to wholesalers, hospitals and pharmacies in over 90 countries around the world.

36. The Concordia International business segment focuses on products at the end of a typical

pharmaceutical product lifecycle. These products typically have lengthy prescription histories

which reduces the risk of any new undetected side-effects that could materially alter prescribing

habits. Concordia International’s top products benefit from historically stable demand in most

circumstances, are complex to manufacture and register with applicable drug product regulatory

authorities, and face a lower risk of innovation due to the off-patent stage of their life cycle.

37. Concordia International’s medicines are predominantly manufactured by a number of

CMOs located in Western Europe. For the vast majority of its products, Concordia International

0039

- 13 -

owns and controls the intellectual property giving it the ability to launch its products in various

geographies, to develop new formulations and to select CMOs of its choice.

38. Concordia International’s products are sold and distributed through two models: the

direct presence (regional hubs) model and the distributor markets model. Concordia International

has a direct sales presence and commercial teams with full control over its sales and marketing

efforts in the United Kingdom, Ireland, Australia, Asia and the Nordic region. In markets where

Concordia International uses distributors for sales and distribution, Concordia International

utilizes area/country managers who manage distributors, train and monitor third-party sales

forces and identify portfolio optimization opportunities.

39. Concordia International’s business represented approximately 72.83% of the Company’s

total consolidated revenue for the first half of 2017 and 68.24% of the Company’s total

consolidated revenue for the 2016 fiscal year.

40. Concordia International’s operations are conducted through Concordia Investments

(Jersey) Limited (“CIJL”, which is one of the Subsidiary Guarantors) and certain other

subsidiaries. Concordia International’s operations are managed by core management teams in

Ireland, Jersey and the United Kingdom and supported by commercial and regulatory teams in

certain international markets. In addition, the Centre of Excellence provides Concordia

International with support on key business functions ranging from regulatory, quality, supply

chain, medical marketing, customer service, human resources, information technology and

finance.

0040

- 14 -

(iii) Concordia North America

41. Concordia North America is the Company’s North American pharmaceutical segment,

owning or licensing a portfolio of legacy pharmaceutical products consisting of branded and

authorized generic products, including Zonegran®, Donnatal®, Photofrin® and products in the

Covis Portfolio. Concordia North America’s business is focused primarily on the United States

pharmaceutical market.

42. The Concordia North America business segment focuses on branded and authorized

generic products that are in the maturity or legacy stage of the pharmaceutical product lifecycle.

Similar to Concordia International’s products, Concordia North America’s products typically

have a well-established record of safety and efficacy.

43. Concordia North America’s product offering also includes Photofrin®, a product for the

treatment of certain forms of rare cancer, which was previously part of the Company’s “Orphan

Drugs” segment before being combined with the Concordia North America business segment.

44. Concordia North America’s products are manufactured by CMOs in North America and

Western Europe.

45. Concordia North America’s business represented approximately 27.17% of the

Company’s total consolidated revenue for the first half of 2017 and 31.76% of the Company’s

total consolidated revenue for the 2016 fiscal year.

46. Concordia North America’s operations are conducted through CPI and Concordia

Laboratories Inc., S.à.R.L. (“CLI”) (each of which are Subsidiary Guarantors) and certain other

subsidiaries. CPI has a portfolio of branded products and authorized generic contracts and CLI

0041

- 15 -

owns Photofrin®. Concordia North America’s operations, including supplier relationships, are

managed from offices in Barbados and supported by the Centre of Excellence and by internal

and external advisors.

(iv) Centre of Excellence

47. The Company operates the Centre of Excellence in Mumbai, India. The Centre of

Excellence employs personnel with various backgrounds to provide a range of business support

to its European and North American based teams, including key business functions of finance,

human resources, information technology, supply chain and regulatory, quality and medical

affairs.

(v) Employees

48. As at October 19, 2017, the Company employed 443 employees worldwide, 165 of which

were employed in the Concordia International segment (other than Mumbai), 33 of which were

employed in the Concordia North America segment (including the United States and Barbados)

and 219 of which were employed at the Centre of Excellence.

49. The Company employs 26 employees at its headquarters in Oakville, Ontario. The

Company’s Canadian employees include senior management and employees engaged in

management, financial, legal and administrative roles within the business.

50. None of the Company’s employees are unionized.

0042

- 16 -

(vi) Competition

51. Competitors in the pharmaceutical market range from large multinational pharmaceutical

and development corporations to small, single product companies that may focus their business

activities on a specific therapeutic area, region or territory. The Company competes with a

variety of other pharmaceutical companies, and there are other products in the market that

compete with many of the products in the Company’s portfolio. In recent years, the Company

has experienced an increase in competition as a result of new market entrants and new products

that compete directly with the Company’s existing products.

(i) Customers

52. As described above, Concordia International’s products are sold and distributed through

two models: the direct presence (regional hubs) model in major markets and the distributor

markets model in other smaller markets. Customers in the United Kingdom account for a

significant portion of Concordia International’s sales, with sales in over 90 other countries

accounting for the balance. Concordia International has a range of wholesale and retail customers

in the United Kingdom, with the primary customer in the United Kingdom being the National

Health Service.

53. Concordia North America sells substantially all of its products directly to three major

wholesalers in the United States, who account for approximately 90% of gross sales. Concordia

North America’s other customers include smaller wholesalers and distributors as well as health

professionals, pharmacists, patients and third-party payors such as group purchasing

organizations and governmental health agencies.

0043

- 17 -

54. For certain of the Company’s products, a significant portion of sales are made to a

relatively small number of customers.

(ii) Suppliers

55. The Company enters into long-term contracts for the supply and third-party manufacture

of its products. This business model allows the Company to maintain a variable cost structure

and avoid significant fixed costs typically associated with the production of pharmaceutical

products.

56. The Company outsources its product manufacturing services to a number of third-party

CMOs. The Company is partnered with a number of well-known, reputable CMOs such as Haupt

Pharma, Cenexi, B Braun Medical UK and Aesica, among others. The Company’s

manufacturing partners are primarily located in Western Europe and, to a lesser extent, North

America.

(d) Business Challenges

57. The Company currently faces challenges posed by the decline in its operating

performance, high leverage and foreign exchange risks, in addition to business environment

challenges in both the North American and International markets.

(i) Increased Competition and Industry Changes

58. In recent years, the Company has faced increased pressure on its product pricing as a

result of increasing competition and new entrants into the market. In both the Concordia North

America and Concordia International business segments, the launch of directly competing

0044

- 18 -

generic products, as well as new products that treat the same conditions as the Company’s

existing products, have resulted in decreasing revenues.

59. Concordia North America’s primary customer base is comprised of wholesalers and retail

drug chains who have undergone, and continue to undergo, significant consolidation. This

consolidation has led to additional purchasing leverage for these groups and pricing pressure on

Concordia North America.

(ii) Regulatory Matters

60. The Company has faced certain regulatory challenges in recent years, and is currently

subject to certain ongoing regulatory investigations being conducted by the United Kingdom

Competition and Markets Authority (the “CMA”).

61. On October 25, 2016, the Company announced that the CMA had commenced an

investigation into various matters in relation to the United Kingdom pharmaceutical sector and

that Concordia International was part of the investigation (the “CMA Pricing Investigation”).

The CMA Pricing Investigation includes matters that pre-date the AMCo Acquisition and the

Company’s ownership of the Concordia International business segment and relate to the

Company’s pricing of certain products. Since commencing the CMA Pricing Investigation, the

CMA has been in the process of information gathering and analysis and the Company has

cooperated with the investigation. The CMA has not reached a decision as to whether or not it

will proceed with a finding of infringement in the CMA Pricing Investigation.

62. On March 3, 2017, the Company announced that the CMA had issued a statement of

objections to Actavis UK Limited, Allergen plc, Cinven (Luxco 1) S.A., Cinven Capital

0045

- 19 -

Management (V) General Partner Limited, Cinven Partners LLP, each third parties, and to CIC,

Amdipharm Limited, Concordia International (Rx) (UK) Limited and Concordia International

(Jersey) Limited (since dissolved), each, other than Concordia International (Jersey) Limited,

either a borrower/issuer or a Subsidiary Guarantor under the Affected Debt Instruments and part

of the Concordia International business segment, in relation to the supply of 10mg

hydrocortisone tablets in the United Kingdom between 2013 and 2016 (the “CMA

Hydrocortisone Investigation”). A statement of objections is a formal statement by the CMA

that it considers that a competition infringement may have occurred. The CMA Hydrocortisone

Investigation also involves matters that predate the AMCo Acquisition and the Company’s

ownership of the Concordia International business segment, and alleges that the parties entered

into agreements under which AMCo (as defined in the statement of objection) was incentivized

not to enter the market with its own competing version of hydrocortisone tablets.

63. The Company responded to the statement of objections and attended an oral hearing to

present the key points of its response to the CMA Hydrocortisone Investigation to the CMA

decision panel. The Company is currently awaiting the CMA’s decision as to whether it may

issue an infringement decision.

64. On October 11, 2017, the Company announced that the CMA commenced additional

investigations in relation to the United Kingdom pharmaceutical sector and that Concordia

International and certain of its products are part of that investigation (the “October 2017 CMA

Investigation” and, collectively with the CMA Pricing Investigation and the CMA

Hydrocortisone Investigation, the “CMA Investigations”). The October 2017 CMA

Investigation also involves matters that predate the AMCo Acquisition and the Company’s

ownership of the Concordia International business segment. The October 2017 CMA

0046

- 20 -

Investigation is at an early information gathering stage and the CMA has confirmed that, at this

time, it has not reached a conclusion on whether competition law may have been infringed.

65. In addition to the CMA Investigations, on April 27, 2017, the United Kingdom Health

Service Medical Supplies (Cost) Act 2017 (the “HSMS Act”) received Royal Assent in the

United Kingdom. The HSMS Act introduces provisions in connection with controlling the cost

of health service medicines and other medical supplies in the United Kingdom. The HSMS Act

also regulates the provision of pricing and other information by manufacturers, distributors and

suppliers of those medicines and medical supplies. It is anticipated that the Department of Health

will issue new regulations under the HSMS Act in early 2018. The Company continues to

monitor the implementation of the HSMS Act to understand how it will affect the Company’s

business and the pricing of its current products.

(iii) Leverage

66. The Company has expanded significantly since the completion of the Qualifying

Transaction through the acquisitions of companies and portfolios of pharmaceutical products that

resulted in the accumulation of approximately $3.7 billion of long-term debt.

67. Although the majority of the Company’s long-term debt does not mature until 2021 to

2023, the servicing of the long-term debt obligations requires significant cash and the

Company’s high leverage and declining EBITDA have restricted debt and equity funding options

available to the Company, hindering its ability to execute on its long-term growth strategy.

0047

- 21 -

68. In addition, the Company has been affected by negative foreign exchange movement

between the USD and GBP attributed in large part to the vote by the United Kingdom to leave

the European Union.

(e) Capital Structure

69. CIC’s capital structure consists primarily of the Common Shares, the Secured Term

Loans, the Secured Notes, the Secured FX Swaps, the Unsecured Bridge Loans and the

Unsecured Notes, all as further discussed below.

70. As at September 30, 2017, the Company had cash on hand in the amount of

approximately $342 million.

(i) Equity

71. The authorized capital of CIC consists of an unlimited number of Common Shares. As at

October 19, 2017, there were 51,282,901 Common Shares issued and outstanding. As discussed

above, the Common Shares are listed on the TSX and the NASDAQ. Cinven is CIC’s largest

shareholder, holding approximately 14% of the issued and outstanding Common Shares as a

result of the Common Shares issued to Cinven as part of the AMCo Acquisition.

(ii) Secured Term Loans

72. CIC is the borrower under a credit agreement dated October 21, 2015 among CIC, as

borrower, the Subsidiary Guarantors, as guarantors, Goldman Sachs Bank USA, as

administrative agent and collateral agent (the “Secured Term Loan Agent”), the lenders party

thereto (the “Secured Term Loan Lenders”) and the other arrangers, bookrunners and agents

party thereto (as amended, restated and supplemented from time to time, the “Secured Term

0048

- 22 -

Loan Credit Agreement”). Pursuant to the Secured Term Loan Credit Agreement, the Secured

Term Loan Lenders agreed to provide secured term loans to CIC in aggregate amounts of $1.1

billion in one tranche (the “USD Secured Term Loan”) and £500 million in another tranche (the

“GBP Secured Term Loan” and, together with the USD Secured Term Loan, the “Secured

Term Loans”), and made available to CIC a secured revolving loan in the aggregate principal

amount of up to $200 million (the “Revolving Loan”). The proceeds of the Secured Term Loans

were used to pay a portion of the purchase price of, and costs related to, the AMCo Acquisition

and to refinance certain of the Company’s indebtedness and certain indebtedness held by AMCo

as at the closing date of the AMCo Acquisition. A copy of the Secured Term Loan Credit

Agreement is attached hereto as Exhibit “B”.1

73. The Secured Term Loans mature on October 21, 2021 and require fixed quarterly

principal amortization payments equal to a percentage of the original principal amount of the

Secured Term Loans (such percentage subject to certain adjustments over time) as well as

mandatory repayments based on CIC’s excess cash flow. Mandatory fixed amortization

payments on the Secured Term Loans of approximately $27.5 million and £12.5 million are due

over the next twelve months. Interest rates on the Secured Term Loans are variable and are

calculated based on LIBOR plus applicable margins, with a LIBOR floor of 1%. Interest on the

Secured Term Loans is payable on the last business day of each of March, June, September and

December for each Base Rate Loan or Canadian Prime Rate Loan (as defined in the Secured

Term Loan Credit Agreement), and on the last day of the applicable one, two, three, six or 12

1 The versions of the various Affected Debt Instruments attached as exhibits to this affidavit are the versions that have been previously publicly filed by the Company, with any applicable redactions for certain sensitive information.

0049

- 23 -

month interest period as agreed to by the Secured Term Lenders in respect of Eurocurrency Rate

Loans (as defined in the Secured Term Loan Credit Agreement).

74. All obligations under the Secured Term Loans and the Revolving Loan are guaranteed by

the Subsidiary Guarantors and are secured by first priority security interests in the assets of CIC

and the Subsidiary Guarantors, with the exception of certain Excluded Property (as defined in the

Secured Term Loan Credit Agreement).

75. As at October 19, 2017, there was approximately $1.068 billion of principal amount

outstanding under the USD Secured Term Loan, plus accrued and unpaid interest, and

approximately £485.63 million of principal amount outstanding under the GBP Secured Term

Loan, plus accrued and unpaid interest, with no amounts drawn and certain letters of credit

issued under the Revolving Loan.

(iii) Secured Notes

76. CIC is the issuer under a senior secured first lien notes indenture dated October 13, 2016

(as amended, restated and supplemented from time to time, the “Secured Notes Indenture”)

among CIC, as issuer, the Subsidiary Guarantors, as guarantors, and U.S. Bank National

Association, as trustee and collateral agent (the “Secured Notes Trustee”) pursuant to which

CIC issued $350 million of 9.00% senior secured first lien notes due April 1, 2022 (the “Secured

Notes”). A copy of the Secured Notes Indenture is attached hereto as Exhibit “C”.

77. Interest on the Secured Notes is payable semi-annually in arrears on October 1, and April

1 of each year at a rate of 9.00% per annum. The Secured Notes are guaranteed by the Subsidiary

Guarantors and are secured by the same first priority security interests in the same or

0050

- 24 -

substantially the same assets of CIC and the Subsidiary Guarantors that secure the Secured Term

Loans.

78. The Secured Notes were issued in connection with the Company’s 2016 Strategic Review

(as defined below). Proceeds from the Secured Notes issuance were, and continue to be, used for

general corporate purposes.

79. CIC, the Subsidiary Guarantors, the Secured Term Loan Agent and the Secured Notes

Trustee are party to an intercreditor agreement dated October 13, 2016 (the “Intercreditor

Agreement”). The Intercreditor Agreement provides that the Secured Term Loan Lenders and

the holders of the Secured Notes (the “Secured Noteholders”) will share rateably on any

proceeds generated from the collateral securing the Secured Term Loans and the Secured Notes.

Pursuant to the Intercreditor Agreement, notwithstanding the equal priority of the liens securing

the Secured Term Loans and the Secured Notes, only the Applicable Authorized Representative

(as defined in the Intercreditor Agreement) will have the right to act or refrain from acting with

respect to any collateral securing the Secured Term Loans and Secured Notes. The Applicable

Authorized Representative will be the Secured Term Loan Agent until the Secured Term Loans

have been repaid and discharged or until the expiration of a specified period after an event of

default under the Secured Notes during which period the Secured Term Loan Agent has not

taken and pursued enforcement action.

(iv) Secured FX Swaps

80. The majority of the Company’s long-term debt obligations are denominated in USD other

than the GBP Secured Term Loan. On August 17, 2016, CIJL entered into a cross-currency swap

(the “August 2016 Swap”) under the 2002 Master ISDA Agreement dated August 15, 2016 (the

0051

- 25 -

“ISDA Agreement”) between Goldman Sachs International (the “Swap Lender”) and CIJL in

order to reduce the Company’s exposure to exchange rate fluctuations between GBP and USD on

certain repayments of its long-term debt agreements. The August 2016 Swap has a principal

amount of $382 million and a maturity date of April 15, 2023. The Swap Lender, the Secured

Term Loan Lenders and the Secured Noteholders are collectively referred to herein as the

“Secured Debtholders”. The Secured Debtholders and the Unsecured Debtholders (as defined

below) are collectively referred to herein as the “Debtholders”.

81. On November 3, 2016, CIJL entered into a cross-currency swap (the “November 2016

Swap” and, together with the August 2016

ontario superior court of justice commercial list in … · 0001 . 2 : notice of application dated...

Documents