FAQs for APP Pharmaceuticals’ CVRs
CONTINGENT VALUE RIGHT (CVR)
What is a Contingent Value Right?
A CVR is a right given to shareholders that ensures they receive additional benefit should a contingent event occur or a corporate target met. A CVR is similar to an option because it has an expiration date that relates to the timing designated for the corporate target. In conjunction with the acquisition of APP by Fresenius, a CVR will be worth anywhere from $0.00 to a maximum of $6.00. Information on the corporate target is explained below.
CVR TRADING
If I have the right to a portion of a CVR, will I be able to trade this?
No, your right to a portion of a CVR cannot be traded. Instead, should the corporate targets be met, you would receive a payout for your portion of the right in 2011.
Does the CVR represent equity in APP?
CVRs do not represent equity in APP.
When will the CVRs cease trading?
The CVRs will cease trading shortly after the Company files its annual Form 10-K for 2010. The owner of the CVR on that day will be the final owner and is eligible to receive payment should the corporate financial targets of APP Pharmaceuticals be met.
CVR VALUE
How will the market value be determined for the CVRs when traded?
The value of the CVRs traded on NASDAQ will be determined by market demand.
How will the value of the CVRs be determined at the end of 2010?
The CVRs are intended to give holders an opportunity to participate in any excess Adjusted EBITDA generated by APP Pharmaceuticals, Inc. (Fresenius Kabi Pharmaceuticals Holding, Inc.) during the three years ending December 31, 2010. Each CVR represents the right to receive a pro rata portion of an amount equal to 2.5 times the amount by which cumulative Adjusted EBITDA of APP Pharmaceuticals (Fresenius Kabi Pharmaceuticals Holding, Inc.), and its subsidiaries on a consolidated basis exceed $1.267 billion for the three years ending December 31, 2010.
If Adjusted EBITDA for the three years does not exceed this threshold amount, no amounts will be paid and the CVRs will expire without value. The maximum amount payable under the CVR Indenture is $6.00 per CVR.
The cash payment on the CVRs, if any, will be determined after December 31, 2010, and will be payable June 30, 2011.
Does the adjusted EBITDA of the parent company Fresenius factor in to the value of the CVRs?
No, the Adjusted EBITDA metric is that generated by APP Pharmaceuticals (Fresenius Kabi Pharmaceuticals Holding, Inc.) during the three years ending December 31, 2010.
If it is determined that the CVRs will expire without value, would the measurement period be extended?
No, the Adjusted EBITDA metric is that generated by APP Pharmaceuticals (Fresenius Kabi Pharmaceuticals Holding, Inc.) and is only for the three years ending December 31, 2010.
