“Business Warranty 1.4.2: Since the applicable Accounts Date … the Businesses [i.e. the Health Business] have been carried on in the ordinary and usual course consistent with past practice and so as to maintain the Businesses as going concerns, without any … material alteration to the nature, scope or manner of the Businesses. Business Warranty 8.1.2: None of the Companies … is currently renegotiating any material term of any Key Contract, which upon conclusion, would have an adverse or detrimental effect on the Businesses.”
“... the best approach for a judge to adopt in the trial of a commercial case is, in my view, to place little if any reliance at all on witnesses’ recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts. This does not mean that oral testimony serves no useful purpose – though its utility is often disproportionate to its length. But its value lies largely, as I see it, in the opportunity which cross-examination affords to subject the documentary record to critical scrutiny and to gauge the personality, motivations and working practices of a witness, rather than in testimony of what the witness recalls of particular conversations and events. Above all, it is important to avoid the fallacy of supposing that, because a witness has confidence in his or her recollection and is honest, evidence based on that recollection provides any reliable guide to the truth.”
“[a]t trial the court will not normally allow proof of primary facts which have not been pleaded, and will not do so in a case of fraud. It is not open to the court to infer dishonesty from facts which have not been pleaded, or from facts which have been pleaded but are consistent with honesty. There must be some fact which tilts the balance and justifies an inference of dishonesty, and this fact must be both pleaded and proved.”
“the Claimants are not entitled to cross-examine the Defendants or their witnesses on the basis of unpleaded allegations of dishonesty or other intentional wrongdoing (including such allegations for which there is no subsisting plea pursuant to my rulings 1-5 above), save to the extent that the court may in its discretion permit such cross-examination on matters going purely to credit and not to any of the issues in the case. Even in that context, I note the statement of Carr J in Baturina v. Chistyakov[2017] EWHC 1049 (Comm) at [126]-[127], cited in Grant and Mumford on Civil Fraud (1st edn.) § 34-056, that where a claimant intends to advance specific allegations of dishonesty based on particular facts in cross-examination, such matters should, as a matter of fairness, be pleaded even where the allegations are not part of the claim being made, in order to ensure that the defendant has a proper opportunity to consider the allegations and decide how he may wish to defend himself.”
“Whether any positive significance should be attached to the fact that a person has not given evidence depends entirely on the context and particular circumstances. Relevant considerations will naturally include such matters as whether the witness was available to give evidence, what relevant evidence it is reasonable to expect that the witness would have been able to give, what other relevant evidence there was bearing on the point(s) on which the witness could potentially have given relevant evidence, and the significance of those points in the context of the case as a whole. All these matters are inter-related and how these and any other relevant considerations should be assessed cannot be encapsulated in a set of legal rules.”
“Of particular relevance to a case of fraud such as the present is the question of motive. By and large dishonest people are dishonest for a reason. They tend not be dishonest wilfully or just for fun. Establishing a motive for deceit, or conspiracy, is not a legal requirement, but if a motive cannot be detected or plausibly suggested then wrongful intention (to tell a deliberate lie in order to deceive) is less likely. The less likely the motive, the less likely the intention to deceive, or to conspire unlawfully.” and Bank of Tokyo-Mitsubishi UFJ Ltd v Baskan Gida Sanayi Ve Pazarlama AS,[2009] EWHC 1276 (Ch) at 858: “motivation in relation to dishonest conduct necessarily requires an assessment not merely of the incentives, but also of the disincentives to embarking upon the course of conduct alleged. The supposed incentives need to be balanced against the disincentives, which in the case of participating in a fraud include not merely a disinclination to do that which is immoral, but also the risk of incurring long-term damage to the commercial reputation of a business enterprise, and the personal risks to the careers and even liberty of the individuals concerned, if found out and brought to justice.”
“i) The commercial purpose of such disclosure clauses is to exonerate the seller from its breach of warranty by fairly disclosing the matters giving rise to the breach. ii) The disclosure requirements of the contract in question must be construed applying the usual rules of contractual interpretation, by reference to the express words used, the relevant factual matrix and the above commercial purpose. iii) The adequacy of disclosure must be considered by careful analysis of the contents of the disclosure letter, including any references in the disclosure letter to other sources of information, against the contractual requirements. iv) A disclosure letter which purports to disclose specific matters merely by referring to other documents as a source of information will generally not be adequate to fairly disclose with sufficient detail the nature and scope of those matters. For that reason, disclosure by omission will rarely be adequate. v) However, it is open to the parties to agree the form and extent of any disclosure that will be deemed to be adequate against the warranty. That could include an agreement that disclosure may be given by reference to documents other than the disclosure letter, such as by list or in a data room. vi) Where disclosure is by reference to documents other than the disclosure letter, only matters that can be ascertained directly from such documents will be treated as disclosed.”
“6. COMPLETION … 6.7 Notwithstanding any provision to the contrary in this Agreement: … 6.7.2 in the event that the Purchaser enters into a W&I Insurance Policy prior to Completion: … (B) the Purchaser agrees with the Sellers that it will not be entitled to make, will not make, and waives any right it may have to make, any Business Warranty Claim…, except if and to the extent that any of the following applies: … (2) the Business Warranty Claim… arises or is increased directly as a result of the fraud of the Sellers and then only if and to the extent that such Business Warranty Claim… relates to the Sellers’ fraud… 7. SELLER WARRANTIES Seller Warranties 7.1 … the Sellers jointly and severally warrant to the Purchaser in the terms of the Seller Warranties. … 9. SELLER LIMITATIONS ON LIABILITY Disclosure 9.1 The Sellers shall not be liable in respect of a Business Warranty Claim …: (i) relating to Business Warranties… made as at the date of this Agreement;…to the extent that the facts and circumstances giving rise to the Business Warranty Claim… are: 9.1.1 in the case of the Business Warranties … made as at the date of this Agreement Disclosed in the Disclosure Letter or are treated as Disclosed pursuant to the terms of the Disclosure Letter … 9.1.3 disclosed in the Data Room; 9.1.4 disclosed in the Q&A report; or 9.1.5 disclosed in [a variety of specified reports]. … 9.27 The limitations on the liability of the Sellers set out in this Clause [9] shall not apply in relation to a Seller to the extent that any claim under this Agreement is in respect of the fraud or wilful misconduct of any Seller. … 16. ENTIRE AGREEMENT … 16.2 Each Party agrees on behalf of itself and its group undertakings that this Agreement is made on the basis that, no Party has been induced to enter into this Agreement by, nor has relied on, any statement, representation, warranty, assurance, covenant, indemnity, undertaking or commitment which is not expressly set out in this Agreement or an agreed form document. … SCHEDULE 19 DEFINITIONS AND INTERPRETATION … “Disclosed” means fairly disclosed with sufficient detail to allow a reasonable buyer to make an informed assessment of the nature and scope of the matter concerned; … “Disclosure Letter” means the letter dated the same date as this Agreement from the Seller to the Purchaser in relation to the Seller Warranties given as at the date of this Agreement. …”
“Business Warranty 1.4.2: Since the applicable Accounts Date … the Businesses [i.e. the Health Business] have been carried on in the ordinary and usual course consistent with past practice and so as to maintain the Businesses as going concerns, without any … material alteration to the nature, scope or manner of the Businesses. Business Warranty 8.1.2: None of the Companies … is currently renegotiating any material term of any Key Contract, which upon conclusion, would have an adverse or detrimental effect on the Businesses.”
“Since the Accounts Date:…the Company has conducted its business in the ordinary course and as a going concern”; and that “In the 12 months ending with the Completion Date the business of the Company has not been nor, so far as the Sellers are aware, is likely to be materially affected in an adverse manner as a result of any one or more of the following things happening to it: 13.7.1 the loss of any of its significant customers or suppliers; or 13.7.2 a material change in the terms on which it trades with or is supplied by any of its significant customers or significant suppliers.”
“[T]he law does not recognise any conception of ‘composite fraud’, i.e. an action in fraud will not lie where a statement is made by an agent who honestly believes it to be true, merely because the principal, or another agent, knew the statement to be false” (Chitty on Contracts, 32nd ed., at paragraph 7-053).”
“As the cases show, if dishonesty and blind-eye knowledge is to be alleged against corporations, large or small, it has to be evidenced by the dishonesty of one or more natural persons. The rules that have been laid down as to what amounts to dishonesty for the purposes of dishonest assistance cannot be circumvented. Of course, the court must look at all the facts and all the actual and constructive knowledge of those involved in representing HSBC, but one cannot avoid the subjective dishonesty stage of the test in order to proceed directly to the objectively dishonest stage as Mr Fenwick seeks to do. The subjective dishonesty that needs to be established, after consideration of all the facts, must either be the dishonesty of a person within the corporation or the blind-eye knowledge of such a person. The latter requires, as I have said and the judge held, that person to have a targeted suspicion (here that there was a Ponzi fraud) and then to decide not to ask questions that might lead to its discovery. The use of the epithet ‘recklessly dishonest’ does not help, because the substantive allegation is simply that HSBC’s management allowed HSBC to be run in such a way that ‘nobody ever got to the point of realising that SIB was a massive Ponzi scheme’. That is negligence not dishonesty.”
“It is obvious that, because it is a fictitious person, a company can only act through one or more natural persons and therefore, as the decisions in El Ajou v Dollar Land Holdings Plc and the Meridian case show, in order to determine whether the company is liable in respect of any particular act or omission it is necessary to identify the natural person who represented the company for that particular purpose and who can therefore can be regarded as embodying for that purpose what is sometimes called its controlling mind and will. When seeking to identify the person who is to count as the company for the purposes of a substantive rule of law it is necessary to consider the nature and policy of that rule. The essence of fraudulent misrepresentation, so far as is relevant for this case, is making a statement that is known to be untrue intending that the person to whom it is made will rely on it. Liability therefore depends on the conjunction of a false statement and a dishonest state of mind. In a case where it is said that a company has made a fraudulent misrepresentation the first step must be to see whether a false statement has been made by someone who is authorised to speak on the company’s behalf. Once that has been established the starting point in deciding whether the company acted dishonestly must be to enquire into the state of mind of the person who made the statement. However, if that person was unaware that the statement was false, it may be necessary to enquire into the state of mind of other persons who directed him to make it or who allowed it to be made. … Entering into an entire contract of the kind represented by the Share Purchase Agreement in this case represents a single indivisible act of will, despite the fact that the contract itself may contain many different provisions. Therefore, although the agreement in this case contains many different representations, they were all made at the same time by the same legal person at the direction of the same natural person or persons. In these circumstances although several persons may together be regarded as representing the company’s controlling mind and will for the purpose of entering into the contract (for example, the various members of the board of directors), it is not possible, in my view, for different persons to represent its controlling mind and will in respect of different parts of that contract. The fact that the state of knowledge of those who represent the company for the purpose of a complex transaction of this kind may be different does not present any difficulties, however, since the knowledge of all those who can be regarded as representing the company will be attributed to it in relation to each part of the contract. In the present case I am prepared to assume that Mr. Peabody, Mr. Stewart Smith, Mr. Burke and Mr. Bryant as directors of the company all counted as Western Star for the purposes of the Share Purchase Agreement and that the knowledge of each of them is to be regarded as the knowledge of Western Star for the purposes of each of the representations made in it. However, that does not help MN since it was accepted that none of them was aware of what Mr. Ellis had been doing.”
“Difficulties may arise in a claim against a company which can only speak or act through its agents or officers, but if an officer of a company writes and represents that which is untrue when many other officers of the company know the true facts, it may well be found that he made the representation without belief in its truth, or that he made it recklessly, careless whether it was true or false. That must depend on the evidence.”
“Whilst I acknowledge that, as a general proposition, it is necessary for there to be both knowledge and intention in one person, and that it certainly ought never to be possible to aggregate as between two innocent agents to arrive at a finding that there has been fraud, it nonetheless does seem to me to be appropriate that, if one agent (or employee) knows that a representation is being made, or should be treated as knowing that a representation is being made even if the agent does not actually know this to be the case, and knows that that representation is false but does nothing to make that known, then the principal (or employer) is liable in fraud.”
“… I can only tell you what I actually did and what I do recall and I don't think I -- well, I don't recall particularly asking the question: did you disclose? Maybe I should have done in retrospect, but I don't recall doing that.”
“Structural issue on Bupe. Bupe has gone. Scotland is not economic due to Bupe has significantly declined.”
“the planned disposal of JM’s Health division (£261m FY21 revenue,£63m EBITDA,£33m operating profit after corporate recharge) via an auction process to a targeted list of strategic parties and financial investors (c.10-15 in total)”
“Divya [Patel] just called re Bup. Nothing terribly urgent but in short they have a PAS [i.e. prior approval supplement] for a 3rd player”
“Thanks for the call. Discussed with Nick [Stapel] and our flexibility is indeed there, with Mar 2022 being an important timepoint for reasons I described. The ask is that you capture Alvogen’s position as soon as practical in a response to the attached proposed amendment that we sent over on Sep 30. This will keep everything grounded as we progress.” 78. On19 October 2021 , Mr Patel replied stating: “Just so we’re clear, after the PAS is approved, does JM intend to support us at the competitive price we discussed yesterday? I have all of the documentation to substantiate the price/volume.” 79. Mr LaFerle forwarded that email to Mr Shackley stating: “Further to my alert from yesterday. I assume the appropriate answer is “yes” at this point in effort to secure Mar…and assuming they agree to Mar at$12.50 ”
“Indeed. It is clear that JM’s position is to retain our share with Alvogen and support Alvogen in retaining your share/competitiveness in the market. With this in mind, after the PAS is approved, we will respect the agreed process for us collectively to remain competitive and responsive in doing such. …”
“Price reduction in Alvogen bup qualify???”
“Price decrease from$16 /gm to$12.50 /gm for 250kg taken no later than Mar2022” and “Competitive price mechanism remains in place”. 86. On25 October 2021 , Mr LaFerle sent an email to Mr Shackley stating that Alvogen had agreed to the 3% profit share proposal, which they were putting forward for board approval, and had also agreed in principle to the Buprenorphine proposal. Mr Patel had also asked what the Health Business would require in order to establish that the Olesen Offer was bona fide and Mr LaFerle told Mr Shackley he would put together a list, adding: “it won’t be much, but important”. 87. Mr Shackley thereupon sent an email to Mr Stapel and Mr Oehler, copied to Mr Wesztergom, reporting on the call of22 October 2021 and subsequent developments as follows: “1. Lis Dex … pushed back strongly on 5% royalty we proposed, just got confirmation subject to their Board approval our 2nd offer at 3% vs 2.5% was agreed… 2. Bup HCl… the latest to support the prior verbal comment of competition being at$8 /g: a. Alvogen has filed a PAS [Prior Approval Supplement] for a #3 supplier (currently JM as #1 and then A N Other #2 who is around the$12.5 /g which is our prior proposal which has previosuly [sic] been “compelling”. b. PAS for #3 is “solid” and approval is anticipated in Summer 2022 and the reference this time was “<8/g” for similar volumes at circa 75% of their demand. c. The contract references an option to match a “bona fide” offer and subject to our review that it is indeed so … the mechansim [sic] for such review is not defined and in discussion with @Ross Oehler we will determine that and who undertakes such review, potenitally [sic] Ross himself … Don [LaFerle] and I will prepare a checklist on what needs to be covered for internal review:… d. Alvogen want to conclude with JM if we will match the offer in the near-term to avoid PO [i.e. purchase order] placement with #3 and to secure the 250Kg supply in March ‘22 which is a notable part of the JM offer, pricing for which remains at$12.5 /g i. I advised that our strategy remains to support Alvogen in their market and to retain our share of their business e. IF and I do mean IF this is a bona fide offer, it will take pricing to a point where our fully loaded costs inc. overhead will not be covered … likely variable and direct only: i. Action: Nick S [i.e. Shackley] to review costing model in context of overall demand / product portfolio for Scotland via SImon E / Lindsay M [Employees of the Health Business] + Strategic Model to compare and contrast price erosion assumptions. There is a Hermes context and there is an ask in the portal for an update on Top 7 contracts (Generics and Innvoator [sic]), status of binding forecasts etc. that Alex and I need to draft our respective reponse [sic] and the Alvogen contract will be a topic, for sure.” 88. On26 October 2021 , Mr Stapel replied to this email, copied to Mr Oehler and Mr Wesztergom, stating: “On your last comment for the request to update the top 7 contracts, binding contracts and forecast, the following: We discussed this today in the weekly Hermes call and Corp Development decided that we will not entertain this question. If we were to give an update on the top 7 contracts, we would have to give a trading update for the year as well, which we will not do. So, no action here.”
“Our fully loaded costs for Bup is like$8.3 , so at the price offered, we are at a slight loss. This would put into question our staying in the product line, or staying in Annan”
“• We need to carefully word the verification of a “bona fide offer”
“The more I let this settle, the more I believe it is a new entry competitor that is zeroing in on$8 . My gut is telling me that Alvogen has either Noramco or Seigfreid in hand at #2 at$12.50 and a more risky supply, Olesson [sic] or other, offering at #3 at$8.00 ”
“Are there any matters, developments or changes which have arisen since the date of the VDD Report (2 July) which are material to the Target Businesses and which a purchaser should be aware of?” 95.2. As regards ‘material contracts’: “Please provide an overview of the Target Business’ (i) key customers (particularly…Alvogen…) and (ii) key suppliers, describe the contracting framework of the Target Business in relation to its customers and suppliers and confirm whether there have been any changes in the relationship of any member of the Target Group with its major customers or key suppliers since the date of the VDD Report… For customer agreements that call for price negotiations in the face of lower third party offers, please confirm whether price reductions have been negotiated under these mechanisms, and whether you think counterparties are likely to obtain such lower third party offers.” 96. On the following day,27 October 2021 , Mr Tosh of HSF sent an email to Messrs Martin, Lyons, Oehler and others commenting on the Q&A process and suggesting a pre-call “to run through and align on how we will respond on the [forthcoming legal due diligence] call”
“Q&A: as discussed with Ross [Oehler] and David [Martin] on Monday…a large number of Q&As seek: (i) forward-looking confirmations assurances; or (ii) bring-down / updates of the VDD Reports. We think these are an attempt to get confirmations via the A&A process that [Altaris]/[Linklaters] will then seek to feed into the warranties. Some suggested actions/process points in light of this: Citi to message to Apollo/its advisers that we will not be giving forward-looking confirmations or bring-down Q&A (these types of Q&A are coming up across the board ie, not just on "legal" Q&As). We will instead be giving warranties and disclosure in the normal way to supplement the extensive information that has been made available for months via the VDD Reports and the VDR. In the case of Apollo, we can point out that they already have sight of the warranty package we will be offering.” 97. Ahead of the pre-call, Mr Tosh sent an annotated copy of Linklaters’ requests to the same group and asked for relevant people to “circulate their proposed talking points” by email. In relation to the request concerning contracts with price adjustment clauses, Mr Tosh’s annotated copy of the document included a placeholder for talking points from Mr Oehler and asked: “Alvogen relevant?”
“… The US Reorganisation Business is engaged in pricing negotiations with Alvogen. Please see Q&A response [●] for further information.”
“Alvogen had come to Hermes with a bona fide offer from a cheaper source. While Hermes didn’t resolve the issue at that time, the parties are now discussing further”. 107. Notes of the call were also made by Antonios Chatzivasileiadis (a trainee solicitor at Linklaters’ Mainstream Corporate Practice between September 2021 and March 2022 and who worked on the sale of the Health Business to the Claimant as part of the legal team advising Altaris). These read: “The counterparty can present to the Group a bona fide offer from a second source. The counterparty is entitled to put it in front of the Group and ask the Group to match it. This has happened and the parties did not reach an agreement — they are still negotiating. The Group is looking at the pricing of the products and making things more competitive for the counterparty”. 108. While the 2 November DD Call was taking place, Mr Fulco sent an email to Peter Partee (a member of the Altaris deal team), titled “Bup pricing” and stating: “Let’s make sure we follow up on the Buprenorphine pricing potential change with Alvogen”
“Definitely”. 109. After this call, Mr Partee sent Mr Voice and others a list of requests that he said had not been addressed and asking for a further call with Mr Oehler and HSF to “run through those items”
“5. Alvogen-Buprenorphine Contract Discussions a. Please discuss status and degree of magnitude of contemplated buprenorphine price concessions with Alvogen.” 111. Citi forwarded this agenda to Mr Wesztergom, Mr Shackley, Mr Lyons and Mr Oehler. Mr Shackley asked for the call to be postponed until Friday5 November 2021 “given the scope of the questions and it is myself who will be doing most of the preparation”
“I need a little more time to prepare a full response and the question on Bup Pricing / Alvogen is a highly sensitive one … I suggest we speak as a group Thu PM to align”
“- Wide range in pricing e.g. Teva$21 /g to$12 /g for US market, Europe somewhat similar to lower end of US market - Price erosion modelled in plan: [BCG Report extract] - Alvogen: - Modelled$15 /g and subsequent general erosion, anticipate this will be accelerated with "matching bona fide offer" concluding at around$12 /g -$13 /g for circa 1200Kg " - Alvogen has contractual right to trigger "matching bona fide offer" clause annually, hence potential for H2/22 dialogue” 113. In response to Mr Shackley’s request for comments and feedback, Mr Stapel confirmed that his notes were consistent with their discussion and they were then incorporated into a document uploaded to Microsoft OneNote, which Mr Shackley intended to use for the due diligence call on the following day. That document also included, in response to a question by Altaris about Lisdex, a summary of the terms which JM believed to be agreed concerning the proposed Lisdex profit-sharing arrangement subject to Alvogen’s board approval. 114. The generics pipeline call took place on5 November 2021 . Mr Fulco’s notes of the call included the following: “Bup - .In US is a wider range of pricing. Seeing pricing are$12 -13/gram. Modeled price erosion in plan. - They have ability to flag they have bonafide offer, JM has ability to match, Alovgen [sic] can trigger on annual basis. - Would be around$12 -13/gram. Have been at$15 /gram but built price erosion into model for future years. - 75% under the contract. - H1 was not price. May be some volume going to 2nd - supplier. Plus stock build Alvogen took.”
“In H2 forecast detail we cannot see significant revenue to Alvogen in H2, which would indicate they’d be down significantly vs. FY20. Based on longer term forecasts from them, are you confident they’ll return to somewhere between FY20 and FY21 levels of activity annually? Is that what FY23 forecast was based on? Are they not ordering until new price is negotiated?” 116. Mr Partee attached to that email a spreadsheet based on the Citi Model that included, inter alia, figures for existing BHCL prices up to the second half of FY21 (stated to be£11.25 /g, which was equivalent to US$14.63 /g using the BCG Exchange Rate); and forecasts for BHCL prices up to the financial year ending31 March 2023 (stated to be£11.83 /g for that year, which was equivalent to US$15.38 /g using the same exchange rate.) 117. The above email was then forwarded by Citi to Mr Wesztergom, Mr Lyons and the JM Group’s Dawn Miriello on7 November 2021 . In advance of the proposed call with Altaris, a pre-call took place on8 November 2021 involving Mr Wesztergom and others. 118. A further legal due diligence call took place on9 November 2021 . In advance of the call, Mr Tosh sent Mr Oehler the “crib sheet” that had been prepared for the 2 November DD Call. 119. Notes of the 9 November DD Call made by Mr Chatzivasileiadis include the following: 119.1. As regards whether there had been any changes in the relationships between the Health Business and its key customers and suppliers since the HSF Report: “All arrangements are in place and there is no change in the contractual relationships. Commercial people can provide more background”. 119.2. As regards Health Business contracts with price adjustment clauses: “If a contract has a bona fide offer scenario, the option may be triggered. There are ongoing discussions with Almegen [sic: Alvogen] re pricing. This particular trigger is not more than once annually – but it can can [sic] happen again as the counterpary [sic] will try to push down prices”. 120. Additional notes from the 9 November DD Call produced by another representative of Linklaters included the following on the same questions: 120.1. As regards the request for details of any changes in the relationship between the Health Business and its key customers and suppliers since the HSF Report: “Not that they are aware of. Commercial point”. 120.2. As regards the question regarding Health Business contracts with price adjustment clauses: “1.6.1 Alvergen [sic] – ongoing discussions on pricing. 1.6.2 triggered a year ago – not yet agreed on price going forward.”
“Usually buprenorphine is a material driver in Q2; however, shipments were weak in the quarter (e.g.£11.1m in Q2'22 vs.£14.2m in Q2'21 and£19.9m in Q2'20). Alvogen is a major bup customer, and perhaps portion of weakness is attributable to ongoing contract negotiations there (i.e. no incentive to order until new contract executed with lower price). …” 123. On11 November 2021 , Mr Fulco emailed Citi to say that: “… Unfortunately, after discussions with our IC [i.e. Investment Committee] today, we have concluded that we can’t progress a transaction for Hermes as contemplated in the term sheet dated November 2nd. As I mentioned on our call earlier today, the first half financial information that was provided on Friday presents a very challenging picture of the business from a third-party financing and valuation perspective. …” 124. On12 November 2021 , he sent Citi a slide deck entitled “Altaris Discussion Materials”
“Buprenorphine HCL: Contract negotiations with key customer Alvogen will result in a 20% price reduction. Also, Alvogen has ability to source 25% of volumes from second API supplier, which was not the case in FY21.” 125. Later the same day, Mr Fulco sent Mr Morton a revised bid for the purchase of the Health Business, which now assumed a reduced enterprise value of£390 million and comprised:£150 million in cash,£75 million by way of the assumption of debt-like liabilities,£65 million in consideration shares,£50 million as a milestone contingent payment, and£50 million as a vendor loan note. 126. Following further discussions with JM, Altaris made a final proposal on16 November 2021 in which it increased the amount of consideration shares to£75 million . 127. Altaris’ offer was presented to the board of the First Defendant, where it was agreed that negotiations with Altaris should continue and the “transaction be brought back to the Board for its consideration and, if thought, fit approval, in due course.”
“Alvogen: What is the anticipated impact of forthcoming pricing decline? What is the current difference between the bid and ask ?” 129. Citi forwarded the agenda to KPMG, Mr Wesztergom, Mr Lyons, Ms Vawda and Ms Miriello. Mr Wesztergom replied pointing out that the agenda contained a fairly extensive list which would require some time to put together the answers. Ms Vawda also replied as follows: “All this is extremely urgent so please can it be prioritised today. Will need an update on outcome from discussion tonight. James [Lyons] should join” 130. Mr Wesztergom then forwarded the agenda to Mr Shackley, Mr Stapel and Alex Zahiri stating: “The list of questions is extensive. There are many follow up questions relating to commercial items, including some forecast demand questions, alvogen price impacts etc etc. May be a tough meeting. Have a read and we can talk about it in the morning”. 131. Handwritten notes made by a representative of EY (Altaris’ FDD advisor) during the call included the following. “Alvogen – BUP - Bid Ask? Don’t have - BUP market under pressure given overall demand - ’19 Alvogen 28 per gram, Teva 22 per g [market] moving to mid teens - Not aware if Alvogen qualified [with] anyone else. If have Q [i.e. qualified] offer then they can match. Don’t know if have Q offer. Contract entangled [with] Lisdex - Pressure to drive to low teens - From$15 to$12 . Was$28 per g in ‘19 - Budget @ 15 / mentally prepared for 12 - If Q offer @ any time can match - BUP lead time is 1 year but 6 [months] is more the norm. Could make it in 4 months - Not making slower than competitor”
“A higher level of confidentiality for Ross [Oehler] seems fine, but we will be limiting a 3rd party’s confidential information for direct review. In many cases, this may be done via redacting”
“Perhaps you and I propose start and pricing structure dates and just kick it off? My window is closing to place orders with the alternate source to realize some savings in 2022”
“I fully understand. JM is committed to following the procedure and continue supplying your needs as a result”. 141. Later that day, Mr Shackley emailed Mr Oehler and Mr LaFerle asking for the verification visit to take place the following week, so that they had a confirmed view no later than10 December 2021 as the December HBR meeting with Mr MacLeod was scheduled to take place on13 December 2021 . 142. Also on2 December 2021 Mr Stapel, Mr Shackley, Mr Wesztergom and others had a meeting to discuss “BUP Volume & Pricing /Alvogen”
“…BUP pricing at Alvogen ○ Alvogen buys about 1.2 mt of BUP (in addition to the new Lisdex contract). Past pricing was at$15 /gr, but was reduced to$12.50 /gr due to competitive pressure ○ I shared with you that a new competitor showed up at Alvogen, quoting$8 /gr (!). We initially thought this was not a credible and bona fide offer, but this seems to be the case ○ Per our contract we have the right to check if this offer is indeed bona fide and have put criteria forward to Alvogen to verify this. Most of these criteria were accepted and Ross will go up to Alvogen to verify the offer next week probably ○ If bona fide, we need to decide to match this new price or not. At this price we still cover cost at Annan, but our OP at Annan will deteriorate significantly. If we accept the price, the new Danish competitor will likely start to approach other BUP customers in the US. This means that the price erosion for the BUP market will accelerate much faster than we anticipated in our business plan. If we don’t accept the offer, we will likely lose 1,2 mt of BUP. Obviously it will also bring up the viability of the Annan site, since the BUP business is the major profit generator.” 143. Mr MacLeod replied to Mr Stapel on3 December 2021 stating: “Thank you for the update. On Alvogen, it sounds like we are between a rock and a hard place, with nowhere to go. Let’s discuss, but it feels like you don’t have an option, but it sounds as though it automatically reduces profit by c£5m before you take some cost out to mitigate – what I would like to hear about is your options to do the latter.”
“Structural issue on Bupe. Bupe has gone. Scotland is not economic due to Bupe has significantly declined.”
“Hi Robert hope you had a good weekend. please could we speak about Bupe. Alarming discussion with Niek and Andy Friday [3 December 2021 ] who suggested Scotland would not be economic as due to a new entrant producing at a much reduced cost, the low prices are going to stay. this is a very material issue and goes beyond challenged pricing to structural problem on the key generic product. On the restructuring case we are going to consider Scotland closure at their suggestion. If this is the case, we have to consider how we deal with A [i.e. Altaris] as we have not said anything to them.” 146. Other Plan B meetings were also scheduled in this period. Ms Vawda’s diary included meetings on 7, 8 and9 December 2021 . Mr MacLeod, Mr Oxley and Mr Lyons were also invited to the 9 December meeting. 147. In the evening of6 December 2021 (local time), Mr Wesztergom sent an email to Mr Stapel attaching an excel spreadsheet for discussion the following morning entitled “Health Senario [sic] Planning December 2021”
“Better to sell it with the remaining (marginal) business or as an empty asset? Linked question to this: better to accept Alvogens offer or lose the 1.2 mt entirely? What creates more value for a buyer? If we concentrate the remaining BUP in EDI, will that create the most value for the potential buyer, knowing that they may buy both sites?” 149. On7 December 2021 , Mr Stapel sent an email to Mr Zrebiec, Mr Shackley, Mr Wesztergom and Mr Zahiri stating that he had spoken to Mr McLeod about the scenario planning which would be shared at the forthcoming HBR. He had indicated that the margin erosion on Buprenorphine would have a big impact on the profitability of the Annan site and that he had been asked to list options to develop more business for the site. 150. On the same day, Mr Wesztergom circulated his spreadsheet to, amongst others, Ms Vawda and Mr Lyons. 151. On9 December 2021 , Mr Lyons sent an email to Ms Vawda, with a copy to Jake McAleer, a junior member of the CorpDev team, attaching some specific draft Plan B slides for discussion with Mr McLeod. These contained high-level view of the discounted cash flow (“DCF”) valuations of the Health Business based on the figures circulated by Mr Wesztergom. He emphasised that this was very much work in progress given the timeframe and also that the Health Management Team was still working on the figures. 152. The draft slides comprised the following: 152.1. A “Re-based IM” scenario. This produced a DCF value of£240 -350 million. One of the key assumptions for this scenario was: “Bup. Revenue excluded but Annan is retained (loss making initially)”
“We will allow the management call tomorrow only (no dinner) with JM and Citi (to be agreed who). What is the proposed time? On the final DD (lets call it what it is) I want to have the principals call tomorrow scheduled at 4-5.30, give the appropriate messaging directly that enough is enough, they know the business is challenged and continues to be and they have priced that in before allowing the final DD call (timing to be agreed tomorrow) I am not happy that we do not seem to be able to control the process with them and manage our clear messaging to them and in this way allow another route to price chip.” 161. On the same day, Mr Tosh emailed Ms Vawda, Mr Lyons and Mr Martin to say that he would be circulating an updated version of the warranties table later that day and that HSF would “ask for input from you and the rest of the relevant JM people (in particular those that have not yet responded to our 23 Nov version being you three, Neik, Andy W, Ross and Alex Z)” with the intention of sending the specific disclosures to Altaris on Friday10 December 2021 . The email stated that the updated table would include: “The below proposed disclosure on the buprenorphine issue based on our discussion on Monday [i.e.6 December 2021 ]. Please let me know if you have any comments on this before we share more widely tonight – in particular please let us know there is anything more specific we can say on this (eg, around expected impact of this issue on the business or how in practice the increased competition is impacting pricing (ie, are customers seeking to reopen contracts?)”. 162. The email set out that draft disclosure as follows: “Proposed buprenorphine disclosure Increased competition in the market for the Businesses' buprenorphine products has, and continues to, adversely impact the prices that the Businesses are able to charge their customers for these products.” 163. Ms Vawda responded to Mr Tosh later on8 December 2021 , copied to Mr Lyons, Mr Martin and individuals at HSF, stating: “I think the Bupe disclosure is fine. Do not want to give judgments on impact but highlight that it is an issue that they [i.e. Altaris] are aware of. Should we also do a general disclosure around operational challenges the business has faced this year and continues to face including those due to the impact of shortage of staff on the business operations, production and delivery of products to its customers. This is the known issue that they have discounted value for.” 164. At 9:31pm on8 December 2021 , Mr Tosh sent a further email to Mr Lyons, Ms Vawda, Mr Martin, and members of the Health Management Team and others attaching a further updated version of the warranty rider and requesting any additional comments on the draft disclosures by the following day. The draft disclosures included the following: 164.1. Against the Ordinary and Usual Course Warranty: “HSF proposed disclosure: Increased competition in the market for the Businesses' buprenorphine products has, and continues to, adversely impact the prices that the Businesses are able to charge their customers for these products” (i.e. the text quoted at paragraph 209 above). 164.2. Against the Key Contracts Warranty: “HSF proposed disclosure: … The US Reorganisation Business is engaged in pricing negotiations with Alvogen. Please see the response provided at Question ID 28960140 in the Q&A Report and document 13.1.1.19 in the Data Room for further information (i.e. the text quoted at paragraph 173 above). … Action point: Ross [Oehler] to provide an update, if any” 165. In his email, Mr Tosh asked Ms Vawda and Messrs Lyons, Martin, Oehler, Stapel, Wesztergom and Shackley to review all the warranties again. In addition, Mr Lyons was asked to review the draft disclosure relating to the Ordinary and Usual Course Warranty and Mr Oehler was asked to review the draft disclosure relating to the Key Contracts Warranty. 166. On9 December 2021 , Mr Tosh sent an updated draft Disclosure Letter to Linklaters, stating that it was “now populated with the specific disclosures” and that “this remains subject to further JM review”
“… Are we planning a specific disclosure on Bupe [i.e. BHCL]? If not – we need to be comfortable that we don’t need one in light of recent developments – I am concerned that we need a disclosure (Although Ross [Oehler] may be able to explain why one is not required – if so, that’s fine, but can we get an email please.)” 168. On10 December 2021 , an M&A associate at Linklaters sent Mr Tosh comments on the draft Disclosure Letter, including the following in relation to the Ordinary and Usual Course Warranty: “LL Note: Please (i) quantify the adverse impact on buprenorphine prices to the Businesses, (ii) confirm the materiality of this issue and (iii) confirm whether this has been factored into the Businesses accounts / business plan?”
“It looks like Apollo [i.e. Altaris]/Linklaters want us to quantify the impact of the BUP price erosion in the SPA. Technically we don’t know this yet, as we are still in negotiation. Should we wait until Corp Dev takes the lead here?”
“We have discussed this as we approached the Alvogen review this week — we do not know what the price will be and have no certainty yet. We should discuss with CorpDev (including the lawyers) whether we provide a range (we know what Alvogen has said to us) but, even there, I think Alvogen was over-simplifying so even the low end of the range is questionable and we are only guessing at an upper end of the range. Nevertheless, Alvogen has said they would like to decide within the month so we will know/do something soon and that needs to be considered by CorpDev, etc. for potential disclosure (whereas we now reference only generally downward price pressure). I will raise this with David Martin and Stuairt Monday but happy for other approaches.” 173. Mr Oehler did indeed have a call with Mr Tosh, Mr Martin and Andrew James on13 December 2021 , although he was unable to recall what was discussed. He said that if the subject had come up, he would only have disclosed limited information given his obligation of confidentiality to Alvogen. Accordingly, it is unlikely that he said more (if anything) than that a bona fide offer had been received but that he was unable to give any pricing range. This was confirmed by Mr Martin, who could not recall any discussion about the Olesen Offer or the impact of the negotiations although he accepted that the difficulty of quantifying the outcome might have been mentioned. 174. Secondly and in parallel, Ms Vawda replied to Mr Tosh on Sunday12 December 2021 , with only Mr Martin, Mr Lyons and others at HSF in copy: “I have been working on other things today and will struggle to get this to you by the morning but I would in any case like to see the complete disclosure post all inputs and then see what if anything is missing. Hope that is OK. If there is anything specific that you feel I need to look at urgently please let me know.” 175. On13 December 2021 , Mr Tosh responded to Ms Vawda saying that: “We will need your input on the warranties today. With signing on Wednesday we should not be adding any new disclosures that may come out of your review after today. The responses to the links comments on 1.4 and 8.1 (see table B below and the PDF attached to my email below) are urgent as they relate to the two points you have previously drawn out as key disclosures.” 176. Ms Vawda replied the same day saying: “On 1.4 and Links comments we cannot be that explicit. Reference the impact has been included in the Q1 update and the H1 update plus the October results we have shown, state that A [i.e. Altaris] is fully aware of the current pricing pressures and have taken a view in the price. Clearly these factors were not anticipated in the IM or the business plan as they have occurred in FY21 [sic]. Not possible to be more explicit as the longer term impact remains an unknown and for them to judge and they have judged it within the price as their prices reduced significantly on the back of the pricing and operational issues.”
“I was informed that the HBR meeting on Monday with Robert, Stephen and Corp Dev., will have a reduced participation from Health. That means only Andy and myself will be present and that Nick, Alex and Ken will not have to attend. Sorry for this last change. Of course we will brief the whole Exco on the discussion in the HBR.”
“Noting that I am not now participating in the meeting, my ask is that the Bup pricing/Alvogen and from Ross’ visit this past Friday confirming offer is “bona fide” that this is clear communicated [sic] conscious of Hermes process and relevant warranties etc.” 179. He sent a further version of these slides to Mr Wesztergom later that day: “… As per e mail my ask if that [sic] Bup pricing issue is well and clearly articulated and understood... spent a fair amount of time on phone to Ross [Oehler] after his visit and it is Bona Fide ... we have our meeting Tues PM to conclude our next steps and Bup pricing is flagged I believe as a topic in the warranties but the outcome is valuation sensitive and Corp Dev should not duck the issue IMHO …” 180. Some time after 8.00 pm that evening, Mr Wesztergom sent an email to Mr MacLeod, Mr Oxley, Ms Vawda, Mr Lyons and others attaching a 49-page slide deck for the HBR part of the meeting the following day. This included slides showing the following: 180.1. The forecast operating profits for the Health Business for FY22 had been reduced to£11 million , compared to the budget forecast of£43 million and the generics division of the Health Business was now forecast to sustain an operating loss of£3 million for FY22, as compared to a budgeted operating profit of£19 million . 180.2. The Health Business was continuing to negotiate with Alvogen on terms relating to Lisdex and that “Bup pricing negotiations ongoing”. 180.3. The Health Business was now forecast to generate an operating profit of£16.7 million for FY23 (as compared to£56.8 million in the strategy plan). It was stated that there was “Significant price pressure on Bup, advancing commoditization of the product line 5 years forward vs strat. plan” and that this “Puts into jeopardy the efficiency of Annan”. 180.4. Slide 29, titled “Bup / Alvogen Pricing Update inc. CHR Olesen Background”
“JM legal review confirms offer as “bona fide”. 181. This email was forwarded to Ms Vawda by Mr Oxley who asked whether she was able to join the call. Ms Vawda responded that evening stating: “James [Lyons] and I will join for 1st hour and focus on plan B as agreed with Robert [MacLeod]. We are in Hermes calls with Altaris all afternoon so if we can shorten the Plan B discussion and touch on full your [sic: year] before we leave that would be great”. 182. On13 December 2021 , Mr Lyons circulated updated versions of his Plan B slides containing the DCF valuations to Mr MacLeod, Mr Oxley, Ms Hayzen-Smith, Mr Stapel and Mr Wesztergom, with a copy to Ms Vawda. These were based on the latest iteration of the Plan B scenarios contained in Mr Wesztergom’s spreadsheet. The assumptions for the DCF model had been slightly altered but the figures were otherwise substantially the same as those previously circulated. They comprised the following: 182.1. “Group Finance (VIU [i.e. value in use] assessment – Sep-21)”
“Base: 755m (£615 -900m – Downside / Upside)”. 182.2. “Case 1: Re-based IM”, for which the key assumptions included: “Hermes follows the previous Strategic plan from FY24 (but rebased to current trajectory)” and “£85m of Capex spent in FY23-25”
“Closure / Divestment of Annan” and “Consider Further break-up of Health”
“Yes, but I (along with Ken [Zrebiec] and Alex [Zahiri] got booted out ... so only Niek [Stapel] and Andy [Wesztergom] now … so much for some weekend hours preparing slides that I doubt will be read … Bup topic aside that WILL be covered for sure! …”
“Just sharing the slides that I provided for the December Health Business Review re. Generics for information. The HBR was curtailed so I did not participate, the material was provided prior and Niek and Andy attended.”
“Review all warranties/disclosures and provide comments/confirm none”
“Provide any further detail for buprenorphine disclosure against 1.4”. 189. The attachment to Mr Tosh’s email included the following: 189.1. Against the Ordinary and Usual Course Warranty: “HSF proposed disclosure: Increased competition in the market for the Businesses' buprenorphine products has adversely impacted, and continues to adversely impact, the prices that the Businesses are able to charge their customers for these products. The impact of this on the financial performance of the Businesses during the relevant periods is reflected in the Q1 Accounts and the September 2021 Accounts. [LL Note: Please (i) quantify the adverse impact on buprenorphine prices to the Businesses, (ii) confirm the materiality of this issue and (iii) confirm whether this has been factored into the Businesses’ accounts / business plan?] HSF Note: We acknowledge Sarah's comments on this. To discuss what else (if anything) we can say here.” 189.2. Against the Key Contracts Warranty: “HSF proposed disclosure: Please see paragraphs 1 and 1.1 of the Commercial Contracts and Insurance section of the Legal VDD Report for details of the termination or expiry of certain contracts entered into by the Companies or the Reorganisation Businesses. The Businesses is [sic] engaged in pricing negotiations with Alvogen. Please see the response provided at Question ID 28960140 in the Q&A Report and document 13.1.1.19 in the Data Room for further information. [LL Note: This disclosure should be against warranty 8.1.2]… Action point: Ross [Oehler] to provide an update, if any.” 190. Mr Tosh also sent a separate email 2 minutes later on the same day (14 December 2021 ) to Ms Vawda, Mr Lyons and Mr Martin, copied to individuals at HSF, seeking their assistance in chasing responses on the draft warranties and disclosures and asking for comments by the following day. He noted: It is critical that we get this input ASAP tomorrow because, as I say below, we will need to send a revised draft of the specific disclosures to Linklaters tomorrow evening at the absolute latest. That will need to include better responses to the comments they have raised than we are currently in a position to give. We otherwise risk Links insisting that we strike out certain disclosures on the basis they are insufficiently previse (with the knock on effect that JUM will taking [sic] the risk for the relevant matter, because we are unable to describe the relevant matter in sufficient detail). 191. At 2:25pm (UTC), Mr Lyons sent an email on the “Since accounts date warranty” to Mr Tosh, copied to Ms Vawda, Mr Martin and another associate of HSF. He stated: I have added two points [on codeine and nabilone] in yellow to the “since accounts date warranty”
“Agree with James”. 193. At 5:17pm (UTC) on14 December 2021 , Mr Lyons sent an email to Ms Vawda, Mr Martin, various members of the Health Management Team and others asking those who had not already done so to respond to Mr Tosh that day “to give confirmation for your areas of accountability” and stating “We are seeking to finalise the documents ahead of the board meeting tomorrow. If there are questions or queries please reach out to Stuairt, David M or myself.” 194. In a further email to Mr Tosh at 6:17pm (UTC) on that day, copied to Ms Vawda, Mr Martin and others, Mr Lyons confirmed that he had reviewed all the draft warranties and disclosures and had no comments. In response to the request to provide any further detail for buprenorphine disclosure he referred to the email he had sent. 195. On14 December 2021 , Members of the Health Management Team also responded to Mr Tosh: 195.1. Mr Stapel replied at 1:28pm (UTC): “I confirm I have no additional comments on all warranties”; and in relation to further detail for the buprenorphine disclosure: “No additional comments. We are still negotiating with our major Buprenorphine customer on pricing, so we are not able to make any quantification at this time”
“Will meet with my boss tomorrow. Can you please share the Bup pricing tiers at Akvogen [sic]?”
“Spoke with Robert [MacLeod] today. 1. I shared with him the approach on BUP with Alvogen. He agreed that we need to retain the volume albeit at a lower margins [sic]. I said that we will still negotiate the offer below and try to get a better price, given our position as incumbent, local stock of BUP, etc. We agreed to reconnect on Wednesday PM his time to discuss the final offer. 2. He asked that we show the OP/EBITDA picture for Annan and or Scotland after keeping this business. Perhaps the codeine phosphate demand will look a bit better now that Palla has filed for bankruptcy.” 208. On20 December 2021 , following a call with Mr Patel and others at Alvogen, Mr LaFerle made a counter-offer for the supply of BHCL, putting forward prices ranging from US$8.95 /g (for volumes below 500kg per year) to US$8.30 /g (for volumes over 1,200kg per year), whilst stipulating that the March 2022 shipment of 250kg would remain at US$12.50 /g. Each of the tiers proposed by Mr LaFerle was$0.50 /g more than the tiers of the Olesen Offer. The email also proposed “200kg of assigned inventory dedicated to Alvogen at JM’s site in West Deptford, NJ, at JM’s cost”. 209. This counter-offer was rejected by Mr Patel in an email on21 December 2021 : “Just to be quite direct, its not quite up to expectations. The expectation was that JM would at least meet the offer we have from the alternate source. While I recognize the available inventory is a slight advantage, I’m not really sure it justifies the$500 /kg difference. Perhaps a counter offer…ff [scil: if] we leave the pricing tiers as-is, can you make a meaningful reduction to the quantity to be procured in March?”. 210. A summary of this message was relayed by Mr LaFerle to Mr Shackley on the same day. 211. On22 December 2021 , a meeting with Mr MacLeod on “Full Year 23 Scotland Outlook” appears to have taken place. It is unclear which of the Health Management Team attended that discussion, though Mr Shackley, Mr Stapel and Mr Wesztergom were involved in preparing slides for the meeting. The 15-page slide deck included the slide on the Olesen Offer (slide 29) from the slide deck for the December HBR (see paragraph 180.4 above). Page 4 of the slide deck contained two outlooks: “Scotland Outlook HBR”, showing a total negative operating profit loss of£6.78 million , and a “Scotland Outlook Revised” showing a total operating profit of£3.3 million . The latter assumed a reduction in operating profit from Buprenorphine of£14.6 million . Page 5 of the deck stated that the figures included “price adjustments for Alvogen”. 212. Also on22 December 2021 , Mr LaFerle sent an email to Mr Patel agreeing to match each of the price tiers for BHCL in the Olesen Offer with immediate effect subject to maintaining delivery of 250kg in March 2022 at a price of US$12.50 /g. Mr Patel responded on the same day saying, inter alia; “Looks good for now, aiming to get this across the finish line…”
“ … One thing we will want to do in near term is set up call for them to go through Q3 results / FY22 outlook since the topline is a lot worse than the last forecast they presented during the process (and below our expectations, which we had haircut vs. their case). A big chuck on this is Buprenorphine but they missed across both generics and innovators. Will probably discuss a bit more at dinner. … However, they continue to be positive about the generics product pipeline moving forward and continued to hear similar theme about innovator demand being there and needing to get staffed up to serve that. Seems like they are there now but I felt like they said that last month and their Q4 is below expectations there.” 216. Later that evening, Mr Fulco sent a further email to Mr Aitken-Davies asking if he was available for a call and stating: “The picture on Bup is worse than I had previously thought so want to give you the download there”. 217. On10 February 2022 , Mr Wesztergom sent an email to Mr Stapel, copied to Mr Oehler. marked “Privileged and Confidential”: “Spoke with Ross [Oehler], but wanted to inform you of a conversation with Nick Fulco later this evening. Nick is very concerned over the Bup pricing development with Alvogen, and was trying further to understand the difference between the indicative price of the current Alvogen offer, compared to that of the Management presentation. As you know we built into the Mgmt plan an average price of 12, compared to the current offer in the 8 range. In his questioning, he was trying to understand the timing of discussion and if we were aware of the price prior to the signing of the deal. Just for your information: December 10th – Ross went to Alvogen to validate the bonified offer December 13th – HBR when we discussed the situation with Robert December 16th BSR and signing December 30th – revised wording in Alvogen contract to reflect the new offer which matched the tier pricing of Alvogen’s bonafied [sic] offer. I didn’t provide those dates to Nick, and Im not sure anything will come up on the topic later, but just got a feeling that Nick was very disappointed in the situation. Separately, he indicated that he believes we had more negotiating power with lisdex and that we “caved” in our offer price. His comment on the timing of prior to signing, gave me pause.”
“Health – call with AW - Wanting to understand Bup and LisDex - If we build Bup in$15 ,$12 - Where are we with Alvogen - Alvogen -$8 -$8 a gram “that’s crazy low” - When did you know” 219. On16 February 2022 , Mr Lyons emailed Mr Stapel, Mr Oehler and Mr Wesztergom as follows: “When we spoke on Friday you indicated we may be close to signing Alvogen. Just to highlight before we sign any material or out of ordinary course contracts we may need to inform Altaris (per the SPA). Ross - I believe you have the relevant schedule (#14 conduct of business pre-close) - we should just review that to see if Alvogen falls within that. (my read is that it does not). Please shout if you dont have that schedule.” 220. Two weeks later, on2 March 2022 , Messrs Shackley, Stapel, Oehler, Wesztergom and others held a call to discuss the Buprenorphine contract with Alvogen. In advance of the call, Mr Shackley circulated an email noting that the total cost per kilogram of producing BHCL at the Annan site was£6,564.32 . The email also stated: “Based on Fx of 1.3, the Alvogen business at$8 /g and for 1200MT per annum contributes Net Revenue of ($8 /g -$2.15 /g) * 1e3 * 1200 =$7.020M or£5.4M Similarly, on a fully loaded basis before SG&A it essentially a -ve$0.53 /g”
“Discussing cash flow forecasts Renegotiation of Alvogen fo [sic] Members of mgmt and alvogen & Dec 10th and received bonafide offer to the business. Bonafide offer for supplier Why was that not disclos [sic]”
“Nick Falco [sic] reached out to me and planned a meeting for Monday to discuss: “some back and forth we’ve had with JM on disclosure of Alvogen contract”