AVADEL PHARMACEUTICALS PLC: Entering into Material Definitive Agreement, Unregistered Sale of Equity Securities (Form 8-K)

Section 1.01 Entering into a Material Definitive Agreement

During April 4 and April 5, 2022, Avadel Finance Cayman Limiteda
Cayman Islands exempt company (the “Issuer”) and an indirect 100% subsidiary of Avadel Pharmaceuticals plc (the “Company”), has closed its previously announced exchange of (i) approximately $117.4 million in aggregate principal of 4.50% Exchangeable Senior Notes due February 1, 2023 published on
February 16, 2018 (the “Existing Securities”) and (ii) approximately $5.6 millionwhich includes interest from February 1, 2022 to, but not including,
April 4, 2022during about $117.4 million in aggregate principal amount of new 4.50% exchangeable senior notes due October 2, 2023 (the “New Obligations”) (the “Swap Transactions”), in each case pursuant to the exemption from registration provided by Section 4(a)(2) under the Securities Act of 1933, as amended (the “Securities Act”).

The New Bonds have been issued pursuant to a Deed (the “Deed”), entered into by the Issuer, the Company and The Bank of New York Mellon, as trustee (the “Trustee”). The New Notes are senior unsecured obligations of the Issuer and are guaranteed by the Company. The New Bonds bear interest at the rate of 4.50% per annum from and including April 4, 2022payable semi-annually in arrears on
April 2 and October 2 of each year, from October 2, 2022. In certain circumstances, the Issuer and the Company may be required to pay additional amounts due to any applicable withholding taxes or tax deductions required in respect of payments on the New Notes. The New Bonds will mature on October 2, 2023unless they have been redeemed or redeemed previously by the Issuer or exchanged by the holders.

Subject to the satisfaction of certain conditions and during certain periods, the New Bonds are exchangeable at an initial exchange rate of 92.6956 American Depositary Shares (the “ADS”) of the Company (each of which represents at the date hereof a ordinary share of the Company, par value $0.01 per share (the “Ordinary Shares”)) per $1,000 principal amount of the New Bonds (as long as the principal amount of such holder’s unexchanged New Bonds is at least
$200,000), which is equal to an initial exchange price of approximately $10.79
by ADS. Upon exchange, the New Notes may be settled in cash, ADS or a combination of cash and ADS, at the option of the Issuer. The exchange rate will be subject to adjustment in certain cases, but will not be adjusted for accrued and unpaid interest. Following a “fundamental netting change” (as defined in the Deed) or upon issuance by the Issuer of a redemption notice, the Issuer will increase the exchange rate for a holder who elects to exchange its New Notes under such “modification – any fundamental change” or during the relevant redemption period in certain circumstances.

The Issuer may redeem in cash all of the New Bonds in connection with certain tax-related events. In addition, the Issuer may redeem in cash all, but not less than all, of the New Bonds, at its option, if the last declared sale price of the ADSs was at least 130% of the exchange price. then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Issuer notifies the redemption, during any period of 30 consecutive trading days ending on the day immediately preceding the date on which the Issuer provides a redemption notice at a redemption price equal to 100% of the principal amount of the New Bonds to be redeemed, plus any accrued and unpaid interest up to the excluded redemption date. No sinking fund is provided for the New Bonds, which means that the Company is not required to repay or periodically withdraw the New Bonds.

The Indenture includes covenants which, subject to derogations and exceptions, limit the ability of (1) the Company and the Issuer to incur secured debt, (2) subsidiaries of the Company (other than Issuer) to incur unsecured debt, (3) the Company and its subsidiaries (including the Issuer) to pay dividends and redeem shares and (4) the Company and its subsidiaries (including the Issuer ) to transfer the share capital of any subsidiary (other than the Issuer) which does not guarantee the New Notes. The Deed also includes certain customary covenants and sets forth certain events of default after which the New Notes may be declared immediately due and payable and sets forth certain types of events of bankruptcy or insolvency involving the Company, after which the New Notes automatically become due and payable. and due. payable.

The Issuer has undertaken to use all commercially reasonable efforts to obtain approval for the listing of the New Notes on a stock exchange recognized for the purposes of section 64 of the Taxes Consolidation Act 1997 of Ireland prior to
October 2, 2022which is the earliest interest payment date for the New Bonds.

The foregoing descriptions of the New Obligations and the Deed do not purport to be complete and are qualified in their entirety by reference to the Deed (which includes the form of the New Obligation). A copy of the Indenture (which includes the form of the New Note) is filed as Schedule 4.1 to this Current Report on Form 8-K and incorporated by reference into Sections 1.01 and 3.02.

The Company has offered the New Bonds to certain holders of the Existing Bonds in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act. The offer and sale of the New Bonds to certain holders of the Existing Bonds did not involve a public offering, the solicitation of offers for the New Bonds was not made by any form of general solicitation or general advertising, and offers for the New Bonds have been solicited only from persons who qualify as “qualified institutional buyers” within the meaning of Rule 144A promulgated under the Securities Act. The New Bonds and any ADSs which may be issued upon the exchange of the New Bonds will not be registered under the Securities Act, and may not be offered or sold under United States in the absence of registration under the Securities Act or an applicable exemption from the registration requirements. Initially, a maximum of 10,880,145 ADS may be issued on the exchange of the New Notes, based on an initial exchange rate of 92.6956 ADS per $1,000 principal amount of the New Notes, which is subject to customary anti-dilution adjustment provisions. For conversions under a “make whole fundamental change” (as defined in the Deed) or the issuance of a redemption notice, a maximum of 17,035,549 ADSs may be issued upon exchange of the New Bonds, based on an initial maximum exchange rate of 145.1378 ADS per
$1,000 principal amount of the New Notes, which is subject to customary anti-dilution adjustment provisions.

This current report on Form 8-K does not constitute an offer to sell or a solicitation of an offer to buy securities and does not constitute an offer, solicitation or sale in any jurisdiction in which such an offer would be unlawful.

Item 3.02 Unrecorded Sales of Equity securities

The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

Item 9.01 Exhibits




(d) Exhibits



  4.1     Indenture, dated as of April 4, 2022, by and between the Issuer, the
        Company and The Bank of New York Mellon, as Trustee.



  4.2     Form of 4.50% Exchangeable Senior Note due 2023 (included in Exhibit
        4.1).

104 Cover page interactive data file (embedded in the Inline XBRL document).

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