Drugmaker Mallinckrodt PLC has obtained support among unsecured bondholders to fund its exit from chapter 11 after a chilly reception from the leveraged credit market, WSJ Pro Bankruptcy reported. The Ireland-based company had been struggling to complete a financing deal needed to emerge from bankruptcy and has been working with Morgan Stanley to find investors. A $900 million loan deal failed to gain traction with market participants, partly due to concerns about investing in a company linked to opioid production amid growing market sensitivity about environmental, social and governance issues. Mallinckrodt has since downsized the deal offering to $650 million and shifted its structure into a bond, rather than a loan, in the hopes of finding hedge funds that might have an easier time investing. The company has secured commitments for the deal from a group of existing creditors. The deal struggles follow a broader selloff in the leveraged credit market in recent weeks that has brought junk-rated bonds and loans under pressure, and pushed at least one company, Dayco Products LLC, to pull a refinancing deal. A nearly $3.3 billion bond issued by Carvana Co., the online used-car dealer, with help from Apollo Global Management Inc. has traded down substantially since. Mallinckrodt has been working to emerge from bankruptcy under a negotiated restructuring to trim roughly $1.3 billion in debt from its balance sheet. The company filed for chapter 11 protection in 2020 to address ballooning liabilities related to its production of opioids and antitrust claims around its flagship H.P. Acthar gel product.
