Replies to post #3913 on Fresenius Kabi Pharmaceuticals (APCVZ)

[itried2]

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.

[uripm]

Hello.

The emision of CVR was done by Fresenius Kabi Pharma, one of the brands of Fresenius ( Helios, ...). So, read the CVR identiture:

Our management may not follow the business, financial and operational policies of APP prior to the Merger. Our directors elected by Fresenius have significant authority with respect to the business, financial and operational policies of us and APP. There can be no assurance that the business, financial and operational policies of APP in effect prior to the Merger including, for example, APP's business strategy, will
continue after the Merger. Different policies may adversely affect the value of the CVRs and any payment thereunder. Except in limited circumstances described in the CVR indenture, we do not have any obligations to CVR holders regarding the operation of our business after the completion of the Merger.

It's in the risk of CVR identiture. It sounds a disclaim by FPK.

According to the date of report:

It may be difficult to determine the amount of cash to be received under the CVRs until 2011 which makes it difficult to value the CVRs.
If any payment is made on the CVR, it will not be made until June 2011 (except in certain cases of foreclosure of the APP shares pledged as security for
our indebtedness), and the amount of any payment will not be determined prior to the second quarter of 2011. We will provide an interim statement of
Adjusted EBITDA for each of 2008 and 2009, and a final statement of Adjusted EBITDA following the end of 2010. The final calculation of any CVR
payment, however, will be provided to you no earlier than the second quarter of 2011. Because the amount of any payment on the CVRs will not be
determined prior to the second quarter of 2011 and the CVR payment will be determined on the basis of cumulative Adjusted EBITDA for a three-year
period, it may be difficult to value the CVRs, and accordingly it may be difficult or impossible for you to resell your CVRs.