The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
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JD, see text below, it would appear the $700m is actually part of the $1.4 bn and is only how it will be cut up..I.e. “Those States choosing to participate”
————-
Under the terms of the agreements, RB will pay a total of up to $1.4 billion to fully resolve all federal investigations into RB in connection with the subject matter of the Indivior indictment and claims relating to state Medicaid programs for those states choosing to participate in the settlement. The resolution will also protect the Group’s participation in all U.S. government programmes.
The indemnity agreement reads a little different to my previous perception.
I felt the indemnity was RB’s obligation to indemnify INDV for all costs prior to the demerger as the current INDV had minimal or no control of the decision-making process within the Group as it would have been just a division of RB at the time.
But the devil is in the detail....
The Group was in advanced discussions with the Department of Justice (DOJ) about a possible resolution to
its investigation until recently.
• In December 2018, the company first learned from U.S. Health and Human Services/Office of Inspector
General (HHS/OIG) that the proposed resolution could likely result, in HHS/OIG’s view, in exclusion. This
represented a change in HHS/OIG’s interpretation of its exclusion authority. This change, and HHS/OIG’s
view that the proposed plea by Indivior could result in exclusion from US federal healthcare programs, was
confirmed by HHS/OIG during a meeting in January. These programs are material to the Group’s revenue.
• The Group continued in dialogue with DOJ and HHS/OIG and, at the time of the FY 2018 results, believed
that a resolution was still possible.
• In early April, it became clear that an alternative resolution with DOJ and HHS/OIG would be necessary. DOJ
then did not give the Group sufficient time to negotiate any alternative resolution that would work under
the new HHS/OIG interpretation.
Hi John, I just had a quick look at the RNS history to see if I could find the stated info, however, it's like looking for a needle in a haystack, but it's definitely in there somewhere. I would also be happy with $400m, even though I think this is way above what they need to actually pay. I also feel RB still has money set aside to assist with an Indivior fine, several months ago I read an RB article with regards to their fine and reading between the lines it seemed to suggest further accountability with regards to Indiviors possible fine. Perhaps it was just the way the article was worded, however, my take on this was they still have liabilities.
GLA
Indivior has indemnification obligations in favor of Reckitt Benckiser (RB). The demerger agreement between Indivior and RB has certain mutual indemnification provisions in respect of any claims and expenses of or incurred by any
company within the Indivior Group or the RB Group arising out of or associated with the Indivior business
prior to the Demerger (whether or not in the ordinary course of business) and in respect of certain tax
liabilities that may arise after, or as part of, the Demerger. Some of these indemnities are unlimited in
terms of amount and duration, and amounts potentially payable by the Indivior Group pursuant to such
indemnity obligations could be significant and could have a material adverse effect on the Indivior Group’s
business, financial condition and/or operating results.
Interesting article JD.
However, the 2nd payment is to cover potential State claims whilst the $1.4bn was in settlement of the Federal Indictment.
Now that poses another question, are there any State claims “lying in wait” for INDV...?
Will try and check this out and post back if I come up with anything.
I'd be happy with that JOE!
Let's get on with it. The sooner the better.
Hi Johnny, they stated on an RNS $400m was set aside to cover the settlement.
GLA
Dodgepot, if the indictment started off at $3bn, RB will soon have paid over $2bn according to this article
https://www.fiercepharma.com/pharma/reckitt-benckiser-agress-to-ink-700m-deal-to-clear-states-probes-into-suboxone-marketing
So there might be even less left for INDV to cough up?
Other points that need to be taken into consideration are as follows: -
1. It is extremely unlikely that they would have to pay a settlement in one go, it would be spread over a number of years.
2. They stated in May that they had been extremely close to a settlement with the DoJ and the only thing that stopped this was issues that came about from others regarding a change in rules relating to future participation in various medical programmes which are basically crucial to Indv continuing. So you would expect that with regards to the proposed settlement at that time they knew exactly how much monies they would have to contribute. This will no doubt have to be increased to satisfy "other" parties to continue accessing the various programmes but the allowance they put aside must be in the ballpark.
Jack, don’t think we should rely on the US Gov worrying about bringing a Co Down, they did it with Purdue, although they were charged with creating and sustaining the Opioid crisis, the. They then went for over $3bn from the Shackler family themselves.
Don’t think this can be applied to INDV, but the fact sentiment does not come to the fore can be worrying.
But let’s not scaremonger as the indictment started off @ $3bn, they have already banked $1.4bn so very very worse case scenario is $1.6bn and we have $1bn in the bank, with the possibility or even probability it will be far less, so don’t believe the same fate as Purdue is evens remote possibility.
Steeplejack.............
Just looked at your posting History....anyone who posts
links to te Share Prophets site should be banned IMO
So tootle off and self destruct please!
The shares are near 95% off their all time high.As erroneous as a share price over £5 might of been,it’s worth noting that we’re most certainly nearer the end than the beginning.The lawyers will suck the marrow out of this one.Don’t expect a swift resolution.Indivior clearly don’t intend to “go quietly”.That is their strategy.Whether it proves the correct strategy only time will tell.My initial assumption was that the US Government are unlikely to destroy a company like Indivior that could meaningfully cope with the opioid addiction crisis sweeping the USA.Maybe I’m naive,maybe simply having someone to blame,someone to fine is more acceptable to the US government than having anyone nodding their heads and remarking that successive US administrations might share some responsibility for the addiction crisis.Blame the doctors,blame the drug companies but don’t for a second suggest that their is something sick in US society as a result of US government policies over recent years.The price of Indivior is now priced for a near ruinous outcome for the company.It almost seems to be suggesting a chapter 11 situation where the company will have to seek a debt moratorium to pay the fine.Well,if that’s what the US Justice Dpt want to inflict on INDV then so be it but it strikes me that the process would be self defeating.I won’t be selling.If I go down with the boat so be it.Afterall,you can’t really prepare for such a kamikaze act by the powers that be.