Elan’s interim chairman told investors today that the embattled pharmaceutical company has enough cash on its books to pay its short term creditors and intends to raise another $1 billion in cash through the sale of some of its product portfolio.
Speaking in a conference call to analysts this afternoon Mr Garo Armen said his main objective is to strengthen Elan’s balance sheet by raising cash from asset sales while ensuring that Elan’s pipeline of new products is not compromised.
Mr Armen said he intends to streamline Elan’s complex management structure to make earnings more transparent.
Elan currently has $1.376 million in cash but has a number of hefty payments to make to banks and creditors in the coming months. Elan is due to pay $321 million at the end of this month to meet its credit line with banks and over the next 18 months the company must pay $420 million for previous acquisitions.
But the main source for concern among investors is a $840 million convertible bond which is due for payment in December 2003.
Mr Armen said Elan could meet all its obligations from its current operations but had decided to raise the additional $1 billion in cash to dispel any fears of a cash crunch.
Commenting on Elan’s controversial web of joint ventures, Mr Armen said that no independent directors had any involvement with them and maintained that there was no impropriety at board level. He said the SEC had narrowed its focus as a result of the company’s cooperation with the US financial watchdog.
Mr Stuart Draper, head of research at Dolmen Butler Briscoe stockbrokers, said that overall he was encouraged that Elan was addressing its long term financing issues such as the bond payment in 2003.
However uncertainty still surrounds what assets the company intends to dispose of to realise its $1 billion cash target.
But some analysts were disappointed with the company's failure to give guidance on future performance but a clearer picture should emerge later this month when all business units have been reevaluated, the company said.