Aceto Corp. of Port Washington, a generic drug manufacturing and chemical distribution company in bankruptcy proceedings, has agreed to sell most of its pharmaceutical subsidiary to Shore Suven Pharma Inc.
In an April 3 filing with the Securities and Exchange Commission, Aceto said the agreement comes after Shore Suven Pharma offered $15 million for Rising Pharmaceuticals, the company’s New Jersey-based pharmaceutical subsidiary, in a “stalking horse agreement.”
A stalking horse agreement provides protections to the best bidder prior to a court-supervised auction. The protection may increase the value of the bidder’s offer, which will be the opening offer for the auction, and can then ensure higher offers during the bidding.
After there were no other bids, Shore Suven Pharma’s stalking horse bid remains and is expected to be approved in U.S. Bankruptcy Court.
Shore Suven Pharma Inc. is a joint venture of India’s Suven Life Sciences and Shore Pharma Investments of USA. Suven is a biopharmaceutical company.
Aceto’s security filing says Shore Suven has “agreed to acquire substantially all of the assets and assume certain liabilities of the Human Health segment, excluding the Nutritional Business Sub Segment.”
Aceto, which has overseas operations in nine countries as well as its domestic holdings, is located in the business park on West Shore Road at 4 Tri Harbor Court. It has about 315 employees.
When a company files for bankruptcy, it can sell off its assets in a court-supervised auction or seek reorganization of its business under the watchful eye of the bankruptcy court judge.
“With its deep expertise in the generic drugs industry, Shore Suven Pharma ensures a seamless transition of Rising’s portfolio, customer programs and manufacturing and drug development relationships,” Aceto’s chief executive officer, William C. Kennally III, said in the initial statement announcing the stalking horse agreement between Shore Suven Pharma and Rising Pharmaceuticals.
“The opportunity to work with Rising’s suppliers and employees to ensure continuity of product supply to customers in connection with this proposed integration will be our top priority. We have an experienced generic pharmaceutical management team ready to facilitate a smooth transition while maximizing the value of these assets. We look forward to working towards a successful closing,” Vimal Kavuru, who will serve as CEO of Shore Suven Pharma and is on Aceto’s board of directors, said.
Aceto filed for Chapter 11 bankruptcy protection in February and said it had entered into a stalking horse agreement with New Mountain Capital, a New York-based investment firm, for its drug and chemical based assets.
On April 1, Nasdaq informed Aceto that its stock would be removed from the exchange April 3. Aceto does not intend to appeal the Nasdaq ruling.
According to Aceto’s SEC filing, the company appeared in front of the Nasdaq Hearing Panel on March 28 to appeal the pending decision.
“Upon delisting, the company expects that its common stock will commence trading on the OTC Pink Market on April 3, 2019 under the symbol ‘ACETQ,'” the filing said.
Unlike NASDAQ, which is a regulated market for trading securities, the OTC Pink Market is an open market in which dealers trade directly without the requirement to find a buyer and a seller for the same stock. Distressed or bankrupt companies often list stocks there.
