Biopharma Credit (BPCR) says that, following the receipt of the necessary regulatory clearances, Roche Diagnostics Limited can now proceed with its acquisition of certain LumiraDx Group companies. As part of this, a sale and purchase agreement between Roche and Andrew Johnson, Lisa Rickelton and Lindsay Hallam of FTI Consulting LLP as the joint administrators of LumiraDx Group Limited and LumiraDx International Limited was previously announced by the company on 29 December 2023. BioPharma Credit Investments V (Master) LP and BPCR Limited Partnership provided an Administration Funding Agreement to support the ongoing ordinary course operations of the Point of Care Diagnostics companies in the period to complete the transaction, under which they are senior secured lenders.
Following the closing of the transaction, US$351.1m is now due to the administrators, which is comprised of US$288.4m in relation to the purchase agreement and US$62.7m in relation to the administration funding facility. The US$351.1m reflects working capital adjustments and includes a US$15.0m holdback from the purchase price, which is expected to be released within 90 days. BPCR expects to receive 50% of the amounts due to the Administrators, less certain expenses, most of which will be returned to the senior secured lenders within the next 10 days and the balance within the next 90 days.
BPCR says that, assuming Roche releases 100% of the Holdback Amount, and estimated total expenses of US$10.0m, BPCR is expected to receive approximately US$170.6m, which is US$3.0m more than its June 2024 valuation of US$167.6m. When added to the US$27.5m received in the form of interest during the life of the loan, BPCR is expected to recover approximately 96 per cent. of its US$206m investment.
BPCR’s manager says that this transaction did not involve the sale of LumiraDx’s approximately 81% interest in Lumira SAS (Colombia), a Colombian distributor of third party diagnostic products with US$13.7m sales in 2023 and US$2.9m in EBITDA in 2023, whose ownership is expected to be transferred to the senior secured lenders in due course. Any proceeds received from a potential sale of this interest would be in addition to the recovery amounts described in the previous paragraph.
[QD comment – James Carthew – When LumiraDx ran into trouble – as was evident from our story published in May 2023 and discussed on the weekly show that week – investors might have been a bit panicked. The shares went from trading at a 4% discount to over 20% by October 2023 (implying a 100% loss on the loan). However, as I highlighted in the article I wrote in October 2021, the manager only lost money on one of 40 loans that it made since the launch of the strategy. On the face of it, LumiraDx might be the second loss-making loan. However, a loss of only 4% on the investment is not earth-shattering – and definitely not commensurate with that wide discount. In addition, the Columbian distribution business offers a route to a full recovery of the loan. I am encouraged by this – if you bought shares last October, well done.]
BPCR : Biopharma Credit updates on acquisition of LumiraDx by Roche
