Elan buys back 99% of LYONs

Elan has put the spectre of a cash crunch in the near term firmly behind it by paying $493 million (€397 million) in cash for almost all its outstanding liquid yield loan notes (LYONs), writes Una McCaffrey

The pharmaceuticals group said yesterday it had bought back more than 99 per cent of the notes after they were surrendered for repayment by their owners.

Notes worth $1.6 million remain outstanding.

The holders had the option to "put" the LYONs back to Elan before Monday evening.

This so-called "poison put" had previously been scheduled for 2018 but was brought forward to 2003 when Elan fell into financial difficulties in 2001.

It was at that time seen as the factor most likely to threaten the firm's future and the event which forced it into a radical restructuring programme.

Elan has since raised $1.9 billion through the sale of assets and a further $595 million in a note and share issue.

The firm spent about $310 million buying back LYONs at the beginning of this year.

Analysts believe Elan now has cash of about $900 million on its balance sheet but say this could be raised above $1 billion if its European sales and marketing businesses are sold. This is expected to happen soon.

Dr Ian Hunter of Goodbody Stockbrokers said this would leave "a leaner biotech company" with cash to cover its commitments for the next two years.

Elan's shares rose by five cents to €4.80 in Dublin yesterday.