Bond Proposals Approved

Bond Proposals Approved

LONDON, UK, 24 September, 2012 - SkyePharma PLC (LSE: SKP) (the "Company") today announces that the Bond Proposals announced on 23 August 2012 by SkyePharma (Jersey) Limited (the "Issuer") have been approved by the bondholders (the "Bondholders") of the Issuer's £63,007,000 6 per cent. Guaranteed Convertible Bonds due 2024 (ISIN XS0192041621) (the "2024 Bonds") and £20,000,000 8 per cent. Guaranteed Convertible Bonds due 2025 (ISIN XS0221445538) (the "2025 Bonds") and are being implemented today. The implementation of the Bond Proposals significantly reduces liquidity demands on the SkyePharma group (the "Group") over the next 24 months and better aligns repayment obligations with the Group's cash generative potential.

Following the approval of the Bond Proposals by the Bondholders, an aggregate principal amount of £22,184,483 of the £83,007,000 outstanding principal amount of the 2024 Bonds and 2025 Bonds has been converted into 22,184,483 Ordinary Shares in the Company (the "New Shares"), representing approximately 48.1 per cent. of the Company's enlarged share capital. The remaining 2025 Bonds are being exchanged for new 6.5 per cent. 2024 Bonds (the "New 2024 Bonds"). Together with the remaining 2024 Bonds, this will leave a total of £60,822,124 6.5 per cent. 2024 Bonds outstanding as non-convertible bonds with the following key amended terms:

- Ordinary interest of 6.5 per cent. per annum, with an option (which the Issuer will exercise), for the Issuer to defer payment of the next four semi-annual interest payments (totalling up to £7.9 million) until up to 4 November 2017, subject to the right to further deferrals ceasing on certain change of control events and a significant cash equity issuance. Deferred interest will become payable earlier out of the proceeds, subject to restrictions, of certain cash equity issuances as well as on early redemption.

- Additional interest of 3 per cent. per annum to 4 November 2017 (up to £9.3 million) and a redemption premium of 47.3 per cent. (£28.8 million) are both payable on redemption.

- The earliest date when the Bondholders may ordinarily redeem the 2024 Bonds is 4 November 2017.

An application has been made to list the New Shares on the Official List of the UK Listing Authority and to admit the New Shares to trading on the London Stock Exchange, which is expected to commence at 8.00am on 25 September 2012. Following the issue of the New Shares, the Company will have in issue a total of 46,127,645 Ordinary Shares.

Peter Grant, Chief Executive Officer of SkyePharma, commented:

"We are pleased to have successfully reorganised the Group's capital structure so soon after receiving positive newsflow on a number of fronts including the approval and launch of flutiform® in Europe, launch of EXPAREL® and approval of RAYOS® in the United States and the launch of Paxil CR™ and Requip® Once-a-day in Japan.

"The Bond Proposals approved today alleviate short-term liquidity demands, better align repayment obligations with the Group's cash generative potential, and leave approximately 52 per cent. of the enlarged share capital with the shareholder base existing prior to the debt to equity conversion. With the Bond refinancing behind us we can now focus on taking the business forward with renewed momentum based on the product launches which have occurred or are expected shortly."

Additional information

The implementation of the Bond Proposals will result in a substantial exceptional charge in the income statement of the Group and the Company. Following the implementation of the Bond Proposals, the ordinary financing charges in the income statement will be higher than the historical charges relating to the Convertible Bonds prior to the implementation of the Bond Proposals. This is due to the additional interest charge described above, the redemption premium and accounting for the liability to fall due in just over five years' time (rather than through to the final maturity dates of 2024 and 2025). 

The Issuer has undertaken to issue a prospectus to list the New 2024 Bonds on the Official List of the UK Listing Authority and to admit the New 2024 Bonds to trading on the regulated market of the London Stock Exchange, subject to certain conditions, by the end of 2012.

Jefferies International Limited acted as financial advisor to the Company and the Issuer in respect of the Bond Proposals.

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About SkyePharma

Using its multiple drug delivery technologies and expertise, SkyePharma creates enhanced versions of pharmaceutical products. The Group receives revenues from thirteen approved products in the areas of inhalation, oral, topical and injectable delivery as well as generating income from the development of further products and technology licenses. The Group's products are marketed throughout the world by leading pharmaceutical companies. For more information, visit www.skyepharma.com.