Alvotech Issues New Shares to Holders of Convertible Bonds

Rhea-AI Summary

Alvotech (NASDAQ: ALVO), a global biotech firm specializing in biosimilar medicines, has issued 22,073,578 new ordinary shares to holders of subordinated convertible bonds. These bonds, originally issued on November 16, 2022, and December 20, 2022, mature on December 20, 2025. The shares were exchanged at a fixed price of $10.00 per share. Most bondholders converting to shares are existing shareholders. Post-conversion, Alvotech's total issued shares are 324,801,040, with 301,944,470 outstanding shares. The new shares will be delivered within seven business days.

Positive

• None.

Negative

• Dilution of existing shares due to issuance of 22,073,578 new shares.
• Potential downward pressure on stock price due to increased share supply.

Insights

Financial Analyst

Alvotech's issuance of new shares in exchange for Convertible Bonds is a significant event that has both short-term and long-term implications for investors. First, it's important to understand the nature of convertible bonds. These are hybrid securities that can be converted into a predetermined number of shares, offering both the steady income of bonds and the potential for capital appreciation of stocks. The conversion price of $10.00 per share is a key detail here, suggesting that bondholders view the company's share price as favorably stable or potentially undervalued in the market.

One immediate impact of this conversion is dilution. By issuing 22,073,578 new ordinary shares, the company has increased its total outstanding shares to 301,944,470. While this can potentially dilute the value of existing shares, it’s important to note that the majority of the bondholders converting their bonds are existing shareholders. This mitigates some concerns about dilution since these are already stakeholders showing continued confidence in the company. Moreover, the fixed conversion price indicates that the company has locked in a specific value for these shares, which could be beneficial if the market price fluctuates.

On the long-term front, this move can be seen as a strategy to optimize Alvotech's balance sheet by reducing debt levels and associated interest obligations. This is a fiscally conservative approach, especially given the maturity date of these bonds in 2025. Reducing debt now could provide the company with more financial flexibility for future investments, R&D, or other strategic initiatives.

Market Research Analyst

From a market perspective, the conversion of bonds into shares by existing shareholders indicates a strong vote of confidence in Alvotech's future prospects. This move suggests that current investors are optimistic about the company’s growth potential and are willing to increase their equity stake rather than opt for cash returns from bond interest. Given that Alvotech specializes in the biosimilar medicines market, which is expected to grow significantly, this could be a strategic position for investors.

However, it’s essential to keep an eye on market sentiment and stock performance following this conversion. The influx of new shares might initially create selling pressure, leading to short-term volatility. In the long term, the company's ability to leverage this capital influx effectively will be crucial. Investors should watch for any upcoming announcements regarding the use of these funds, whether for R&D, marketing, or acquisitions, which could further enhance shareholder value.

Additionally, this share issuance can affect the company's market capitalization, impacting various financial ratios and potentially altering analyst recommendations. Given the growth potential in the biosimilar market, this can be seen as a positive move, but the company must now justify this increased equity by delivering strong performance and strategic growth.

REYKJAVIK, Iceland, July 01, 2024 (GLOBE NEWSWIRE) -- Alvotech (NASDAQ: ALVO), a global biotech company specializing in the development and manufacture of biosimilar medicines for patients worldwide, today issued new shares to holders of subordinated convertible bonds, originally issued by Alvotech on November 16, 2022, and December 20, 2022, with maturity on December 20, 2025 (the “Convertible Bonds”).

Today, Alvotech issued 22,073,578 new ordinary shares in exchange for Convertible Bonds, at the fixed price of US$10.00 per share. The majority of the holders of Convertible Bonds exercising their conversion right, are existing shareholders in Alvotech.

Following the conversion of the Convertible Bonds into shares, the total number of issued shares in Alvotech is 324,801,040 and the total number of outstanding shares is 301,944,470. Pursuant to terms of the Convertible Bonds, the newly issued shares shall be delivered to their owners no later than seven business days from today.

About Alvotech
Alvotech is a biotech company, founded by Robert Wessman, focused solely on the development and manufacture of biosimilar medicines for patients worldwide. Alvotech seeks to be a global leader in the biosimilar space by delivering high quality, cost-effective products, and services, enabled by a fully integrated approach and broad in-house capabilities. Alvotech has launched two biosimilars. The current development pipeline includes nine disclosed biosimilar candidates aimed at treating autoimmune disorders, eye disorders, osteoporosis, respiratory disease, and cancer. Alvotech has formed a network of strategic commercial partnerships to provide global reach and leverage local expertise in markets that include the United States, Europe, Japan, China, and other Asian countries and large parts of South America, Africa and the Middle East. Alvotech’s commercial partners include Teva Pharmaceuticals, a US affiliate of Teva Pharmaceutical Industries Ltd. (US), STADA Arzneimittel AG (EU), Fuji Pharma Co., Ltd (Japan), Advanz Pharma (EEA, UK, Switzerland, Canada, Australia and New Zealand), Cipla/Cipla Gulf/Cipla Med Pro (Australia, New Zealand, South Africa/Africa), JAMP Pharma Corporation (Canada), Yangtze River Pharmaceutical (Group) Co., Ltd. (China), DKSH (Taiwan, Hong Kong, Cambodia, Malaysia, Singapore, Indonesia, India, Bangladesh and Pakistan), YAS Holding LLC (Middle East and North Africa), Abdi Ibrahim (Turkey), Kamada Ltd. (Israel), Mega Labs, Stein, Libbs, Tuteur and Saval (Latin America) and Lotus Pharmaceuticals Co., Ltd. (Thailand, Vietnam, Philippines, and South Korea). Each commercial partnership covers a unique set of product(s) and territories. Except as specifically set forth therein, Alvotech disclaims responsibility for the content of periodic filings, disclosures and other reports made available by its partners. For more information, please visit www.alvotech.com. None of the information on the Alvotech website shall be deemed part of this press release.

ALVOTECH INVESTOR RELATIONS AND GLOBAL COMMUNICATIONS
Benedikt Stefansson, VP
alvotech.ir@alvotech.com

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FAQ

What recent action did Alvotech take regarding their convertible bonds?

Alvotech issued 22,073,578 new ordinary shares to holders of subordinated convertible bonds.

What is the fixed price for the new shares issued by Alvotech?

The fixed price for the new shares is $10.00 per share.

How many new shares did Alvotech issue to bondholders?

Alvotech issued 22,073,578 new ordinary shares.

When will the new shares issued by Alvotech be delivered to their owners?

The newly issued shares will be delivered within seven business days.

What is the total number of issued and outstanding shares in Alvotech after the recent share issue?

The total number of issued shares is 324,801,040, and the total number of outstanding shares is 301,944,470.