(Bloomberg) — Hertz Global Holdings Inc. is facing questions from the U.S. Securities and Exchange Commission over its plans to sell as much as $500 million worth of stock that may be worthless in the midst of the car-rental company’s bankruptcy. The shares were halted Wednesday.“We have let the company know that we have comments on their disclosure,” SEC Chairman Jay Clayton said in a CNBC interview Wednesday. “In most cases when you let a company know that the SEC has comments on their disclosure, they do not go forward until those comments are resolved.”In its Monday disclosure announcing the proposed stock sale, Hertz said equity holders will not see a recovery from any bankruptcy plan unless those with more senior claims, including bondholders, are paid in full. The company said that would require a rapid and unanticipated improvement in its business outlook. The startling plan has captured the attention of Wall Street and now, securities regulators.Hertz’s shares soared as much as 21% following Clayton’s comments before retreating to $1.94, in line with Tuesday’s close. Trading was then halted at 11:44 a.m. in New York.Hertz has previously said in a court filing that a share sale could raise as much as $1 billion in cash. The company has bonds that are about $2.3 billion underwater, not including what it owes to banks and any lease payments, as well as other expenses.Clayton said Hertz was aware of the SEC’s concerns, but he declined to speculate whether the company would move forward without addressing them. “We will see,” he said.Back-and-forth with SEC attorneys who review corporate filings isn’t uncommon when a company seeks to sell shares, and doesn’t necessarily mean the regulator will reject a proposal. Still, Hertz’s plan is unusual because of its ongoing bankruptcy and stark warning to prospective investors.Hertz didn’t respond to a request for comment.(Updates with information on SEC review in seventh paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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Last week, Hertz won bankruptcy court approval to sell up to $1 billion in stock. Clayton did not elaborate on what the issues were with Hertz’s plan, but indicated that the company was unlikely to go through with the offering until those issues were resolved, according to CNBC. Hertz has warned that its shares would be eventually “worthless”, but the stock sale could benefit creditors seeking to recover more of their claims during the bankruptcy process.
Amarin (AMRN) has announced a settlement agreement with Apotex Inc. that resolves a patent litigation over Apotex’s abbreviated new drug application (ANDA) seeking US approval of a generic form of Vascepa capsules. Shares in Amarin rose 5% in Tuesday’s after-market trading.Amarin’s lead product Vascepa was initially launched in the US in 2013 as an adjunct therapy to diet to reduce triglyceride levels in adult patients with severe hypertriglyceridemia. A new, cardiovascular risk indication for the fish-oil derivative was approved by the FDA in December 2019 based on the results of the landmark Reduce-It trial.The company is currently appealing to the U.S. Court of Appeals a March 2020 patent invalidity ruling in favor of generic companies, Hikma Pharmaceuticals USA Inc. and Dr. Reddy’s Laboratories, Inc. Because Apotex is not a party to that litigation, it is not directly subject to related rulings.As part of the new settlement agreement, Apotex can not sell a generic Vascepa in the US until August 9, 2029 (the same date as Amarin’s 2018 settlement agreement with Teva (TEVA)) or earlier under certain customary circumstances. These circumstances include if Amarin is not successful in its pending appeal of the March 2020 Nevada district court decision.The agreement also substantially resolves future litigation with Apotex that relating to the December 2019 cardiovascular risk reduction indication of Vascepa, says Amarin.“This settlement involves no financial payment from Amarin to Apotex and allows Amarin to avoid incremental litigation expense and distraction associated with Apotex’s participation in patent litigation related to the MARINE and REDUCE-IT indications,” said John F. Thero, Amarin CEO.Year-to-date shares in Amarin have plunged 68%, but analysts retain a cautiously optimistic Moderate Buy outlook on the stock. This breaks down into 7 recent buy ratings vs 5 hold ratings. Meanwhile the average analyst price target of $18 translates into 155% upside potential. (See Amarin stock analysis on TipRanks)Stifel Nicolaus analyst Derek Archila reiterated his Amarin Hold rating following the settlement announcement. “While this is a slight positive, we don’t see this a major stock moving catalyst” he wrote, adding that he expects AMRN shares to remain range bound until it gets closer to the critical appeal hearing later this year.Related News: Too Much Uncertainty Keeps This 5-Star Analyst Watching Amarin Stock From the Sidelines Jazz Pharma Scores Surprise Early Approval For Lung Cancer Treatment Merck’s Gardasil Receives FDA Nod For Expanded Cancer Indications More recent articles from Smarter Analyst: * Itron Partners With Accell To Boost Business In Latin America * Kamada’s Covid-19 Therapy Approved For Compassionate Use In Israel * Chembio Sinks 59% In Pre-Market As FDA Revokes Its Covid-19 Test; Top Analyst Cuts Rating * HSBC Resumes Plans To Cut 35,000 Jobs Postponed By Pandemic