UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): June 8, 2012 (June 4, 2012)
SAVIENT PHARMACEUTICALS, INC.
(Exact Name of Registrant as Specified in Charter)
| Delaware | 0-15313 | 13-3033811 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| One Tower Center East Brunswick, NJ |
08816 | |||
| (Address of Principal Executive Offices) | (Zip Code) | |||
Registrant’s telephone number, including area code: (732) 418-9300
Not applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.04. | Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement. |
As previously disclosed, on February 4, 2011, Savient Pharmaceuticals, Inc. (the “Company”) entered into an indenture (the “2011 Indenture”) with U.S. Bank National Association, as trustee (“US Bank”) relating to the Company’s $230 million aggregate principal amount of 4.75% Convertible Senior Notes due 2018 (the “Existing Notes”).
On June 7, 2012, Morris, Nichols, Arsht & Tunnell LLP, counsel to the Company, received a letter from Ropes & Gray LLP (the “June 7, 2012 Letter”), on behalf of certain unidentified alleged holders of certain of the Existing Notes, stating that such alleged holders had notified US Bank on June 4, 2012 of an event of default under Section 6.01(j) of the 2011 Indenture (the “Alleged Event of Default”). Pursuant to Section 6.01(j), an Event of Default occurs if “an involuntary case or other proceeding shall be commenced against the Company or any Significant Subsidiary seeking liquidation, reorganization or other relief with respect to the Company or such Significant Subsidiary or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of the Company or such Significant Subsidiary or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 30 consecutive days.” Pursuant to the 2011 Indenture, upon such an Event of Default, the principal of, and accrued and unpaid interest on, all of the Existing Notes (approximately $122,000,000 in principal amount) would automatically become due and payable. The June 7, 2012 Letter makes reference to the April 30, 2012 creditor derivative action complaint filed by Tang Capital Partners, LP in the Delaware Court of Chancery against the Company and its current directors (the “Delaware Action”), which, among other things, seeks appointment of a receiver of and for the Company under Section 291 of the Delaware General Corporation Law, and asserts that the pendency without dismissal or stay for a period of 30 consecutive days of the Delaware Action triggered an Event of Default under Section 6.01(j) of the 2011 Indenture.
On June 8, 2012, the Company, through its counsel Morris, Nichols, Arsht & Tunnell LLP, responded to the June 7, 2012 Letter and set forth several reasons why the Delaware Action is not and cannot be a basis for any Event of Default or acceleration under Section 6.01(j) of the 2011 Indenture. For the reasons set forth in the Company’s response letter, the Company strenuously and in good faith disputes the occurrence of an Event of Default or any acceleration under the 2011 Indenture. A copy of the Company’s response letter is attached hereto as Exhibit 99.1. In addition, in connection with the Delaware Action, the Company has submitted a request to the Delaware Court of Chancery that the Court schedule a hearing on the Company’s motion to dismiss the Delaware Action at the earliest convenience of the Court. Further, the Company is commencing litigation against Tang Capital Partners LP in the Delaware Court of Chancery seeking, among other things, a declaratory judgment that an Event of Default in regard to the Existing Notes has not occurred under the 2011 Indenture.
If the Alleged Event of Default were to result in the acceleration of the Existing Notes so that they become due and payable prior to the date on which they would otherwise have become due and payable and such acceleration is not rescinded, then, under the Company’s indenture, dated as of May 9, 2012, by and among the Company, certain of the Company’s subsidiaries as guarantors, and US Bank, as trustee (the “2012 Indenture), following notice and a 30-day cure period, a cross-default would be triggered, which would in turn give holders of at least 25% of the notes issued under the 2012 Indenture the right to cause the accreted value of, and any accrued and unpaid interest on, the notes issued under the 2012 Indenture to immediately become due and payable.
| Item 9.01. | Financial Statements and Exhibits |
(d) Exhibits
| 99.1 | Letter to Ropes & Gray LLP, dated June 8, 2012 |
- 1 -
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: June 8, 2012 | SAVIENT PHARMACEUTICALS, INC. | |||||
| By: | /s/ Philip K. Yachmetz | |||||
| Philip K. Yachmetz | ||||||
| SVP & General Counsel | ||||||
EXHIBIT INDEX
| Exhibit |
Exhibits | |
| 99.1 | Letter to Ropes & Gray LLP, dated June 8, 2012 | |
Exhibit 99.1
MORRIS, NICHOLS, ARSHT & TUNNELL LLP
1201 NORTH MARKET STREET
P.O. BOX 1347
WILMINGTON, DELAWARE 19899-1347
(302) 658-9200
(302) 658-3989 FAX
David J. Teklits
302 351 9292
302 498 6212 Fax
dteklits@mnat.com
June 8, 2012
BY EMAIL AND FEDERAL EXPRESS
Thad A. Davis, Esquire
Ropes & Gray LLP
3 Embarcadero Center
San Francisco, CA 94111-4006
| Re: | Tang Capital Partners, LP v. Savient Pharmaceuticals, Inc., et al. |
C.A. No. 7476 -VCG
Dear Thad:
I am in receipt of your letter dated June 7, 2012, on behalf of unidentified alleged holders of certain 4.75% Convertible Senior Notes due 2018 (the “Notes”) issued by my client, Savient Pharmaceuticals, Inc. (“Savient”). In your letter, you state that those alleged holders have notified U.S. Bank National Association, as indenture trustee for the Notes (the “Trustee”), that an Event of Default has occurred under Section 6.01(j) of the indenture dated as of February 4, 2011 governing the Notes (the “Alleged Event of Default” under the “Indenture”). You further state that, as a result of the Alleged Event of Default, principal and interest on the Notes is accelerated (the “Alleged Acceleration”).
The Alleged Event of Default and the Alleged Acceleration are transparent pretexts manufactured by your clients solely to harm Savient. Stated simply, your clients are aware that they have no right to seek appointment of a receiver under the Indenture because no Event of Default has occurred, and now are attempting to secretly use an improperly filed lawsuit that they had no standing to bring to manufacture an Event of Default, thereby violating the very provision of the Indenture that they seek to avoid. Accordingly, your clients’ actions have been taken in bad faith, violate basic principles of equity and law, and reflect an abuse of the legal process. Savient intends to pursue all appropriate remedies for this misconduct, and demands that you and any alleged noteholder on whose behalf you purport to act immediately notify the Trustee in writing that the notice apparently sent to the Trustee is void and of no effect.
Thad A. Davis, Esq.
June 8, 2012
Page 2
Specifically, you state in your letter that the Alleged Event of Default and Alleged Acceleration are based solely upon the pendency of a lawsuit filed by Tang Capital Partners, LP (“Tang”) against Savient in the Delaware Court of Chancery (the “Delaware Action”) for thirty days without a dismissal or a stay. The Delaware Action is not and cannot be a basis for any Event of Default or acceleration under Section 6.01(j) of the Indenture for at least four independent reasons.
First, Tang is both the plaintiff in the Delaware Action and undoubtedly one of the unidentified alleged holders referenced in your letter. Tang cannot manufacture an Event of Default under the Indenture through its pursuit of the baseless Delaware Action.
Second, the Delaware Action is not an action within the description of Section 6.01(j). Section 6.01(j) relates only to the appointment of a receiver in certain third-party “bankruptcy” and “insolvency” proceedings under federal and state creditor rights laws. The Delaware Action is not one of these proceedings. Rather, Tang’s claim for the appointment of a receiver in the Delaware Action is a request made in a corporate governance context under the Delaware General Corporation Law — a context wholly apart from the bankruptcy and insolvency proceedings described in, and intended by, Section 6.01(j).
Third, as Savient has explained in its motion to dismiss in the Delaware Action as well as other filings in that lawsuit, the Delaware Action is barred by the express terms of the Indenture. Indeed, the No Action Clause in the Indenture expressly barred Tang from bringing any claims against the Company, including its claim for appointment of a receiver. Such a meritless action, brought by a party with no standing, cannot be the basis for an Event of Default or acceleration of any type.
Fourth, it is evident from the assertions in your letter that Tang has manipulated the judicial process in the Delaware Action to create the circumstances in which the Alleged Event of Default could be asserted. Tang had a duty of candor to the Delaware Court, and it breached that duty by not disclosing its intention to use the continued pendency of the Delaware Action as a pretext for the Alleged Event of Default. That intention, as improper as it is, should have been disclosed to the Court in the initial proceedings in the Delaware Action, and the failure of Tang to disclose that intention further discredits both the Delaware Action and the Alleged Event of Default.
The conduct that Tang and the unidentified alleged holders referenced in your letter have pursued, both in the Delaware Action and in respect of the Alleged Event of Default and the Alleged Acceleration, are improper and troubling. Among other things, Savient believes that your clients are acting in bad faith, tortiously interfering with Savient’s business, and acting contrary to basic principles of equity and law. Savient reserves all rights with respect to any party engaged in this scheme to create a pretextual basis to damage Savient.
Sincerely,
/s/ David J. Teklits
David J. Teklits