đ·New Chapter 11 Bankruptcy Filing - REVA Medical Inc.đ·
REVA Medical Inc.
January 14, 2020
Take cover folks: itâs raining med device bankruptcies these days.
San Diego-based REVA Medical Inc. develops bioresorbable polymer technologies for coronary artery disease, peripheral artery disease and embolization therapy. If that sounds technical, youâre right: just like every other med device company that finds its way into bankruptcy. The details of the products go right over our heads but, fortunately, the general themes are the same as far less technical debtors. In a nutshell: the companyâs products are highly capital intensive and require access to equity and debt markets.
And, indeed, REVA has accessed those markets. It was publicly-traded on an Australian exchange; it also raised tens of millions ($56.8mm to be exact) by way of convertible notes; and, finally, it had access to a senior secured credit facility that looks like a whole lot like bridge financing to a bankruptcy. Indeed, on January 9, just four days prior to filing, the debtorâs gained access to an additional $4.4mm from Goldman Sachs Specialty Lending Group, L.P. which perfectly teed up a cash collateral motion (which was granted the next day). With all of that debt and ârelatively minimal sales,â the debtor âhas not yet generated revenue at a level sufficient to support its cost structure.â (PETITION Note: we really hope that forthcoming med device AND biopharma debtors borrow this language because itâs likely universally applicableâŠthey can save themselves the cost of 0.2 billable hours). Compounding matters was the maturity of its first issuance of converts, putting the debtor on the hook for $25.5mm. Ruh roh.
The debtor ran into other issues. For one, the debtorâs distributor, Abbott Laboratories ($ABT), withdrew one of the debtorâs products from the market (âAbsorbâ) after adverse events and poor clinical trial results. Score one for ethics! Thereafter, the European Society of Cardiology published new guidelines that basically napalmed the debtorâs Absorb saying that itâs not useful/effective and might actually be harmful. Whoops!
But thereâs some good news here. The debtor has a deal. The deal will erase $90mm of debt with the senior secured lenders and the holders of convertible notes receiving new equity in the reorganized (read: post-bankruptcy) company. This product will live to see another day with the hope of a major course correction.
Jurisdiction: D. of Delaware (Judge Dorsey)
Capital Structure: $9.7mm senior secured credit facility (Goldman Sachs International), $25mm '14 7.54% convertible notes (matured 11/14/19)(Goldman Sachs International, Senrigan Capital Group), $47.1mm â17 8% convertible notes (GSI, Senrigan, Medtronic, Inc., HEC Master Fund LP, J.P. Morgan Securities plc, TIGA Trading Pty Ltd, and Saints Capital Everest LP)
Professionals:
Legal: DLA Piper LLP (Thomas Califano, Stuart Brown, Jamila Willis)
Financial Advisor: Ernst & Young LLP
Claims Agent: Stretto (*click on the link above for free docket access)
Other Parties in Interest:
5%+ Equityholders: Senrigan Capital Group, Goldman Sachs International, Robert Stockman, Elliott Associates, L.P, Brookside/Bain, Capital Public Equity, Cerberus Capital Management, JP Morgan, Citicorp Nominees PTY Limited, JP Morgan Nominees Australia Pty Limited, HSBC Custody Nominees (Australia) Limited âGSCO, HSBC Custody Nominees (Australia) Limited
Senior Secured Agent: Goldman Sachs International
Legal: Weil Gotshal & Manges LLP (David Griffiths, Kevin Bostel) & Richards Layton & Finger PA (Paul Heath, Zachary Shapiro, Sarah Silveira)
Senior Secured Lenders: MS Pace LP, Senrigan Capital Group Limited
Elliott Management Corporation
Legal: Debevoise & Plimpton LLP (Jasmine Ball) & Ashby & Geddes PA (William Bowden)