Aspen sells Japanese business to settle debt


Aspen sells Japanese business to settle debt


Published Date: 2019-11-12 | Source: Stephen Gunnion | Author: Stephen Gunnion

Aspen sells Japanese business to settle debt

The group is selling the operation to German-based drug group Sandoz and will use the proceeds to further reduce its debt.

Aspen Pharmacare is selling its operations in Japan as it continues to divest of non-core businesses to help settle debt. The pharmaceuticals manufacturer says Sandoz, a division of Swiss multinational Novartis, will pay up to €400 million (R6.56 billion) for the business.

Aspen's debt has concerned investors, particularly after it was forced to ask its lenders for a temporary increase to its debt ceiling late last year. It reduced its debt by 27% to R38.9 billion in the year to end-June after selling its infant nutritional business and a portfolio of drugs distributed in the Asia Pacific region. That took its leverage ratio to 3.62 times, below the covenant ceiling of 4.0 times it has with its bankers. It aims to reduce its leverage ratio to below 3.0 times in the medium term.

It said Sandoz, which is headquartered in Germany and is a leader in generic and biosimilar medicines, would pay €300 million up front, with the balance linked to the business meeting certain supply criteria and licensing opportunities. It expected to receive all milestone payments by December 2023.

Under the deal, the group has also entered a five-year manufacturing and supply agreement with Sandoz, which the German company can elect to continue for a further two years, for the supply of active pharmaceutical ingredients, semi-finished and finished products related to the portfolio of divested brands. Aspen said its current portfolio and operational platform in Japan didn't provide sufficient scale and leverage for the group in that market.


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