As filed with the Securities and Exchange Commission on April 8, 1998
Registration No. 333 - [ ]
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ICN PHARMACEUTICALS, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 33-0628076
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
3300 Hyland Avenue
Costa Mesa, California 92626
(714) 545-0100
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
Copies To:
David C. Watt
Executive Vice President, General Counsel and Corporate Secretary
ICN Pharmaceuticals, Inc.
3300 Hyland Avenue
Costa Mesa, California 92626
(714) 545-0100
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
Approximate date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box.
[X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box: [ ]
<TABLE>
<CAPTION>
Calculation of Registration Fee
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Title of Each Class Proposed Maximum Proposed Maximum
of Securities to be Amount to be Offering Price Per Aggregate Offering Amount of Registration
Registered(1) Registered(2) Share(3) Price Fee
- --------------------- ------------------- ------------------ ------------------- ----------------------
<S> <C> <C> <C> <C>
Common Stock, 1,050,000 shares $48.13 $50,536,500 $14,908.27
$.01 par value per
share
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<FN>
(1) Also includes associated Preferred Stock Purchase Rights.
(2) Pursuant to Rule 416(a) under the Securities Act of 1933, as amended,
an indeterminate number of additional shares of Common Stock are
registered hereunder that may be issued in the event that applicable
antidilution provisions with respect [to conversion of the Series D
Convertible Preferred Stock] become operative, and an indeterminate
number of additional shares of Common Stock are registered hereunder
that may be issued by reason of any stock split, stock dividend or
similar transaction involving the Common Stock.
(3) The offering price per share is estimated pursuant to Rule 457(c)
solely for the purpose of calculating the registration fee and is
based upon the average of the high and low price of shares of Common
Stock as reported on the New York Stock Exchange on March 30, 1998
(which date is within five business days prior to the date of the
filing of this Registration Statement).
</FN>
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT
THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE
WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND
EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
Subject to Completion, Dated April 8, 1998
PROSPECTUS
ICN PHARMACEUTICALS, INC.
1,050,000 SHARES OF COMMON STOCK
Common stock, $.01 par value (the "Common Stock"), of ICN
Pharmaceuticals, Inc., a Delaware corporation (the "Company" or "ICN").
This Prospectus relates to the offer and sale by SmithKline Beecham p.l.c.
or an affiliate of SKB designated by SKB (jointly "SKB"), as more fully
described herein, of: (a) 615,750 shares of Common Stock issuable upon
conversion of the Company's Series D Convertible Preferred Stock, par value
$0.01 per share (the "Series D Preferred Stock") (b) up to 434,250
additional shares of Common Stock issuable upon conversion of Series D
Preferred Stock in the event that the Current Market Price for the Common
Stock (as defined herein) is less than certain agreed upon price
thresholds; and (c) an undetermined number of additional shares of Common
Stock as a result of any adjustments to the conversion price of the Series
D Preferred Stock pursuant to the antidilution provisions of the
Certificate of Designation of Rights and Preferences of Series D
Convertible Preferred Stock of ICN Pharmaceuticals, Inc. (the "Certificate
of Designation") governing the Series D Preferred Stock (which shares of
Common Stock are collectively referred to as the "Shares"). The Company
will not receive any of the proceeds from the sale of the Shares. However,
under certain circumstances, SKB will be required to pay to the Company the
amount, if any, by which the Current Market Price for the Common Stock
exceeds certain agreed upon price thresholds. The Company will bear all of
the expense of such registration, other than underwriting discounts and
selling commissions applicable to the sale of Shares and fees and
disbursements of counsel, financial and other advisors for SKB. See
"Selling Stockholder" and "Plan of Distribution."
The Shares covered by this Prospectus were originally issued to SKB in
a private placement made by the Company under Section 4(2) of the
Securities Act of 1933, as amended (the "Securities Act"), in consideration
of the Company's acquisition, on February 24, 1998, of the African, Asian
and Australian rights to 39 prescription and over-the-counter
pharmaceutical products, including Actal, Breacol, Coracten, Eskornade,
Fefol, Gyno-Pevaryl, Maxolan, Nyal, Pevaryl, Ulcerin and Vylcim
(collectively the "SKB Product Rights") from SKB. The Company received the
SKB Product Rights in exchange for $45,500,000 payable in a combination of
$22,500,000 in cash and 821 shares of Series D Preferred Stock initially
convertible into 615,750 shares of Common Stock valued at $23,000,000.
Except under certain circumstances, SKB has agreed not to sell the Shares
until November 4, 1999. The Company has agreed to pay SKB an additional
amount in a combination of cash and Series D Preferred Stock (or, under
certain circumstances, shares of Common Stock) to the extent proceeds
received by SKB from the sale of the Shares during a specified period from
November 4, 1999 through December 2, 1999 and the then market value of the
unsold Shares do not provide SKB with an average value of $46.00 per share
(including any dividend paid on the Shares to SKB). Alternatively, SKB is
required to pay the Company an amount, in cash or shares of Common Stock,
to the extent that such proceeds and market value provide SKB with an
average per share value in excess of $46.00 per share (including any
dividend paid on the Shares to SKB). See "The Company," "Recent
Developments" and "Selling Shareholder."
SKB and any broker-dealers, agents or underwriters that participate
with SKB in the distribution of the Shares may be deemed to be
"underwriters" within the meaning of the Securities Act and any commissions
received by such broker-dealers, agents or underwriters and any profit on
the resale of the Shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
The Common Stock is traded on the New York Stock Exchange ("NYSE")
under the symbol "ICN." On March 30, 1998, the closing sale price per
share, as reported by the NYSE, was $47.88.
The Shares may be sold from time to time by SKB or, in certain cases,
by transferees or assignees. Such sales may be made in the over-the-counter
market, on the NYSE or other exchanges (if the Common Stock is listed for
trading thereon), or otherwise at prices and at terms then prevailing, at
prices related to the then current market price or at negotiated prices.
The Shares may be sold by any one or more of the following methods: (a) a
block trade in which the broker or dealer so engaged will attempt to sell
the securities as agent but may position and resell a portion of the block
as principal to facilitate the transaction; (b) purchases by a broker or
dealer as principal and resale by such broker or dealer for its account;
(c) ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and (d) privately negotiated transactions. In
addition, any Shares that qualify for sale pursuant to Rule 144 may be sold
under Rule 144 rather than pursuant to this Prospectus.
AN INVESTMENT IN THE SHARES OFFERED HEREBY INVOLVES A HIGH DEGREE OF
RISK. SEE "RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Date of this Prospectus is April _, 1998.
[RED HERRING]
Information contained herein is subject to completion or amendment. A
Registration Statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the Registration Statement
becomes effective. This Prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any jurisdiction in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission" or "SEC").
Such reports, proxy statements and other information filed by the Company
may be inspected and copies obtained (at prescribed rates) at the public
reference facilities maintained by the Commission in Washington, D.C. at
450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at the
Commission's Regional Offices in New York, at 7 World Trade Center, 13th
Floor, New York, New York 10048, and in Chicago, at Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material can be obtained (at prescribed rates), by writing to the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549. Such material also is available through the Commission's
Website (http://www.sec.gov). Such material also can be inspected at the
NYSE, 20 Broad Street, New York, New York 10005, on which the Common Stock
is listed.
This Prospectus is part of a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") filed by the Company with the Commission under the Securities
Act with respect to the Common Stock. This Prospectus does not contain all
the information set forth or incorporated by reference in the Registration
Statement and the exhibits and schedules relating thereto, certain portions
of which have been omitted as permitted by the Commission's rules and
regulations. For further information with respect to the Company and the
Common Stock offered hereby, reference is made to the Registration
Statement and the exhibits thereto which are on file at the offices of the
Commission and may be obtained upon payment of the fee prescribed by the
Commission as described above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following reports and documents filed by the Company with the
Commission pursuant to the Exchange Act are incorporated into this
Prospectus by reference as of their respective dates:
1. Annual Report on Form 10-K for the fiscal year ended December 31,
1997, dated March 31, 1998.
2. The description of the Common Stock and associated Preferred
Stock Purchase Rights contained in the Registration Statement on
Form 8-A, dated November 10, 1994.
3. Current Report on Form 8-K, dated December 8, 1997, as amended
by Form 8-K/A, filed as of February 17, 1998.
All reports and other documents filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the
date of this Prospectus and prior to the termination of the offering of the
Common Stock pursuant to this Prospectus (this "Offering") shall be deemed
to be incorporated by reference in this Prospectus and to be a part hereof
from the date of filing of such reports and documents. Any statement
contained herein or in a report or document incorporated or deemed to be
incorporated herein by reference shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed report or document that is or
is deemed to be incorporated by reference herein modifies or supersedes
such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The making of a modifying or superseding statement shall not be deemed
an admission for any purpose that the modified or superseded statement,
when made, constituted a misrepresentation, an untrue statement of a
material fact or an omission to state a material fact that is required to
be stated or that is necessary to make a statement not misleading in light
of the circumstances in which it was made.
THE COMPANY WILL PROVIDE, WITHOUT CHARGE, TO EACH PERSON TO WHOM A
COPY OF THIS PROSPECTUS IS DELIVERED, ON THE REQUEST OF SUCH PERSON, A COPY
OF ANY OR ALL OF THE REPORTS AND DOCUMENTS INCORPORATED HEREIN BY REFERENCE
(OTHER THAN EXHIBITS THERETO, UNLESS SUCH EXHIBITS ARE SPECIFICALLY
INCORPORATED BY REFERENCE INTO SUCH REPORTS OR DOCUMENTS). WRITTEN REQUESTS
FOR SUCH COPIES SHOULD BE DIRECTED TO DAVID C. WATT, EXECUTIVE VICE
PRESIDENT, GENERAL COUNSEL AND CORPORATE SECRETARY, ICN PHARMACEUTICALS,
INC., 3300 HYLAND AVENUE, COSTA MESA, CALIFORNIA 92626. TELEPHONE INQUIRIES
MAY BE DIRECTED TO DAVID C. WATT AT (714) 545-0100.
THE COMPANY
ICN is a multinational pharmaceutical company that develops,
manufactures, distributes and sells pharmaceutical, research and diagnostic
products and provides radiation monitoring services. The Company pursues a
strategy of international expansion which includes (i) the consolidation of
the Company's leadership position in Eastern Europe and Russia; (ii) the
acquisition of high margin products that complement existing product lines
and can be registered and introduced into additional markets to meet the
specific needs of those markets; and (iii) the creation of a pipeline of
new products through internal research and development, as well as
strategic partnerships and licensing arrangements. References to ICN or the
Company include the subsidiaries of ICN, unless the context requires
otherwise.
The Company distributes and sells a broad range of prescription and
over-the-counter pharmaceutical and nutritional products in over 60
countries worldwide, primarily in North America, Latin America, Western
Europe and Eastern Europe. These pharmaceutical products treat viral and
bacterial infections, diseases of the skin, myasthenia gravis, cancer,
cardiovascular disease, diabetes and psychiatric disorders. Among the
Company's products is the broad spectrum antiviral agent ribavirin, which
is marketed in the United States, Canada and most of Europe under the trade
name Virazole(R). Virazole(R) is currently approved for commercial sale in
over 40 countries for one or more of a variety of viral infections,
including respiratory syncytial virus ("RSV"), herpes simplex, influenza,
chicken pox, hepatitis and human immunodeficiency virus (HIV). In the
United States and Europe, Virazole(R) is approved only for use in
hospitalized infants and young children with severe lower respiratory
infections due to RSV.
The Company believes it has substantial opportunities to realize
growth from its internally developed compounds. These compounds are the
result of significant investments in its research and development
activities related to nucleic acids conducted over three decades. On July
28, 1995, the Company entered into an Exchange License and Supply Agreement
(the "Agreement") and a Stock Purchase Agreement with a subsidiary of
Schering-Plough Corporation ("Schering") to license the Company's
proprietary drug, ribavirin, as a treatment for chronic hepatitis C in
combination with Schering's product INTRON-A(R) interferon alpha 2(b)) (the
"Combination Therapy"). The Agreement provided the Company an initial
non-refundable payment by Schering of $23,000,000, and future royalty
payments to the Company for marketing of the drug, including certain
minimum royalty rates. Schering will have exclusive marketing rights for
ribavirin for hepatitis C worldwide, except that the Company will retain
the right to co-market in the countries of the European Union. In addition,
Schering will purchase up to $42,000,000 in Common Stock upon the
achievement of certain regulatory milestones. Under the Agreement, Schering
is responsible for all clinical developments and regulatory activities
worldwide. During 1996, clinical trials commenced with the enrollment of
more than 2,000 patients. In December 1997, the Company was informed by
Schering that Schering had filed a New Drug Application for the Combination
Therapy with the U.S. Food and Drug Administration (the "FDA"). See "Risk
Factors -- No Assurance of Successful Development and Commercialization of
Future Products."
The Company believes it is positioned to expand its presence in the
pharmaceutical markets in Eastern and Central Europe. In 1991, the Company
acquired a 75% interest in Galenika Pharmaceuticals ("Galenika"), a large
drug manufacturer and distributor in Yugoslavia. Galenika was subsequently
renamed ICN Yugoslavia. This acquisition added new products and
significantly expanded the sales volume of the Company. With the investment
in ICN Yugoslavia, the Company became one of the first Western
pharmaceutical companies to establish a direct investment in Eastern
Europe. ICN Yugoslavia continues to be a significant part of the Company's
operations although its sales and profitability have, at times, been
substantially diminished owing principally to the imposition of sanctions
on Yugoslavia by the United Nations. The United Nations Security Council
adopted resolutions, however, that in December 1995, suspended and, in
October 1996, lifted economic sanctions which had been imposed on the
Federal Republic of Yugoslavia since May of 1992. The suspension and
lifting of economic sanctions enabled ICN Yugoslavia to resume exporting
certain of its product lines to Russia, other Eastern European Markets,
Africa, the Middle East and the Far East. See "Risk Factors -- Risk of
Operation in Yugoslavia."
In 1995, the Company acquired a 75% interest in ICN Oktyabr, one of
the largest pharmaceutical companies in the Russian Federation. The Company
purchased an additional 15% interest in ICN Oktyabr, in 1996, raising its
ownership to 90%. Also in 1996 and 1997, the Company acquired a 67%
interest in Alkaloida Chemical Co. ("Alkaloida"), one of the largest
pharmaceutical companies in terms of sales in Hungary and a major world
producer of morphine and related compounds. In 1996 and 1997, the Company
greatly expanded its Russian presence through the acquisition of four
additional pharmaceutical companies: Leksredstva, located in Kursk;
Polypharm, located in Chelyabinsk; Marbiopharm, located in Yoshkar-Ola; and
AO Tomsk Chemical Pharmaceutical Plant ("Tomsk"), located in Tomsk. The
combined sales of these five companies establish the Company among the
largest pharmaceutical companies in Russia today and a pioneer and leader
in the privatization movement. In October 1997, the Company acquired an 80%
interest in Polfa Rzeszow S.A. ("Rzeszow"), a pharmaceutical company
located in Poland. In February 1998, the Company announced that it would
invest $300,000,000 in Russia over the next five years, including
$47,000,000 for the construction of a new pharmaceutical plant as part of
its ongoing modernization of ICN Oktyabr. The Company is currently
exploring acquisition opportunities in Russia, the Czech Republic and
Romania. See "Risk Factors -- Risk of Operations in Eastern Europe, Russia
and China."
In 1997, a subsidiary of the Company acquired the worldwide rights to
eleven products from F. Hoffmann-La Roche Ltd. ("Roche"). The products
include Alloferin, Ancotil, Efudix, Glutril, Levo-Dromoram, Librium,
Limbitrol, Mestinon, Prostigmin, Protamin and Tensilon. Also in 1997, a
subsidiary of the Company purchased Roche's Humacao, Puerto Rico
manufacturing plant (the "Humacao, Puerto Rico Plant"). Simultaneously,
Roche leased the Humacao, Puerto Rico Plant from the Company for two years
at $4,000,000 per annum.
On February 24, 1998, the Company acquired the SKB Product Rights from
SKB. The Company received the SKB Product Rights in exchange for
$45,500,000 payable in a combination of $22,500,000 in cash and 821 shares
of Series D Preferred Stock initially convertible into 615,750 shares of
Common Stock valued at $23,000,000. Except under certain circumstances, SKB
has agreed not to sell the Shares until November 4, 1999. The Company has
agreed to pay SKB an additional amount in a combination of cash and Series
D Preferred Stock (or, under certain circumstances, shares of Common Stock)
to the extent proceeds received by SKB from the sale of the Shares during a
specified period from November 4, 1999 through December 2, 1999 and the
then market value of the unsold Shares do not provide SKB with an average
value of $46.00 per share (including any dividend paid on the Shares to
SKB). Alternatively, SKB is required to pay the Company an amount, in cash
or shares of Common Stock, to the extent that such proceeds and market
value provide SKB with an average per share value in excess of $46.00 per
share (including any dividend paid on the Shares to SKB). See "Selling
Shareholder."
In addition to its pharmaceutical operations, the Company also
develops, manufactures and sells, through its wholly owned subsidiary, ICN
Biomedicals, Inc., a broad range of research and diagnostic products and
radiation monitoring services. The Company markets these products
internationally to major scientific, academic, health care and governmental
institutions through catalog and direct mail marketing programs.
The principal executive offices of the Company are located at 3300
Hyland Avenue, Costa Mesa, California 92626. The telephone number at such
address is (714) 545-0100.
RISK FACTORS
An investment in the Common Stock involves a high degree of risk and
may not be appropriate for investors who cannot afford to lose their entire
investment. Prospective purchasers of the Common Stock should be fully
aware of the risk factors set forth herein. This Prospectus contains or
incorporates statements that constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. Those
statements appear in a number of places in this Prospectus and in the
documents incorporated by reference and may include statements regarding,
among other matters, the Company's growth opportunities, the Company's
acquisition strategy, regulatory matters pertaining to governmental
approval of the marketing or manufacturing of certain of the Company's
products and other factors affecting the Company's financial condition or
results of operations. Prospective investors are cautioned that any such
forward-looking statements are not guarantees of future performance and
involve risks, uncertainties and other factors which may cause actual
results, performance or achievements to differ materially from the future
results, performance or achievements expressed or implied in such
forward-looking known and unknown statements. Such factors include the
various risk factors described below.
DEPENDENCE ON FOREIGN OPERATIONS
Approximately 80% and 78% of the Company's net sales for 1996 and
1997, respectively, were generated from operations outside the United
States. The Company operates directly and through distributors in North
America, Latin America (principally Mexico), Western Europe and Eastern
Europe and through distributors elsewhere in the world. Foreign operations
are subject to certain risks inherent in conducting business abroad,
including possible nationalization or expropriation, price and exchange
controls, limitations on foreign participation in local enterprises,
health-care regulation and other restrictive governmental actions. Changes
in the relative values of currencies take place from time to time and may
materially affect the Company's results of operations. Their effects on the
Company's future operations are not predictable. The Company does not
currently have a hedging program to protect against foreign currency
exposure and, in certain of the countries in which the Company operates, no
effective hedging program is available.
RISK OF OPERATIONS IN YUGOSLAVIA
ICN Yugoslavia represents a material part of the Company's business.
Approximately 44% and 30% of the Company's net sales for 1996 and 1997,
respectively, were from ICN Yugoslavia. In addition, approximately 62% and
48% of the Company's operating income for 1996 and 1997, respectively, was
from ICN Yugoslavia. ICN Yugoslavia, a 75% owned subsidiary, operates in a
business environment that is subject to significant economic volatility and
political instability. The economic conditions in Yugoslavia include
continuing liquidity problems, inflationary pressures, unemployment, a
weakened banking system and a high trade deficit. Between May 1992 and
December 1995, ICN Yugoslavia operated under United Nations' sanctions that
severely limited the ability to import raw materials and prohibited all
exports. While most of the sanctions have been suspended, certain risks,
such as hyperinflation, currency devaluations, wage and price controls and
potential government action could continue to have material adverse impact
on the Company's financial position and results of operations.
During 1992 and 1993, the rate of inflation in Yugoslavia was over one
billion percent per year. Inflation was dramatically reduced in January
1994 when the government enacted a stabilization program designed to
strengthen its currency. This program reduced the annualized inflation rate
to five percent by the end of 1994, increased the availability of hard
currency, stabilized the exchange rate of the dinar and improved the
overall economy in Yugoslavia. In 1995, the effectiveness of the
stabilization program began to wane, resulting in a decline in the
availability of hard currency and an acceleration of inflation to an annual
rate of 90% by year end. In November 1995, the dinar was devalued from a
rate of 1.4 dinars per U.S.$1 to a rate of 4.7 dinars per U.S.$1.
Throughout 1996, the level of inflation in Yugoslavia was relatively
stable, with a Yugoslavia-reported inflation rate of 60%. The lifting of
sanctions by the United Nations eventually provided opportunities to export
outside of Yugoslavia. However, Yugoslavia has not fully recovered the
international status it held before sanctions were imposed and management
believes that economic reform and privatization is necessary before the
economy will improve dramatically. The Yugoslavian government is still
negotiating to regain membership in the International Monetary Fund and
World Bank. The 1997 Presidential and parliamentary elections in Yugoslavia
have not, in management's view, resulted in political change that would
provide for a foundation of significant economic reforms.
In an effort by the Central Bank of Yugoslavia to control inflation
through tight monetary controls, Yugoslavia is now experiencing severe
liquidity problems. This has resulted in longer collection periods for ICN
Yugoslavia's receivables. Most of ICN Yugoslavia's customers are slow to
pay due to delays of health care payments by the government. This has also
resulted in ICN Yugoslavia being unable to make timely payments on its
payables.
ICN Yugoslavia began 1997 with a net monetary asset exposure of
$134,000,000. During 1997, the Company reduced its monetary exposure by
converting dinar-denominated accounts receivable into notes receivable
payable in dinars, but fixed in dollar amounts. The first agreement was
made early in the first quarter of 1997 with $50,000,000 of accounts
receivable converted into a one year note bearing interest at LIBOR plus
1%. Approximately $47,000,000 from the first note was refinanced in early
1998, with full payment including interest at LIBOR plus 1% scheduled for
1998. A second agreement was arranged at the end of the first quarter of
1997 whereby the Yugoslavian government agreed to purchase $50,000,000 of
drugs. The sales under this agreement were recorded as notes receivable
bearing interest at LIBOR plus 1% on the outstanding balance and, which
have special payment guarantees fixed in dollar amounts. The second
agreement also allows the Company to offset certain payroll tax obligations
against outstanding accounts receivable balances. Subsequent to these two
agreements, the Company negotiated an arrangement with the government of
Yugoslavia under which ICN Yugoslavia would commit to continue to provide
products, in dollar denominated sales, in an amount up to $50,000,000 per
calendar quarter for one year, and the government would pay a minimum of
$9,500,000 per month towards outstanding accounts receivables. However, at
no point in time can the amount due to ICN Yugoslavia from the government
exceed $200,000,000, including both accounts and notes receivable.
Receivables that arise from this agreement are interest bearing with
interest at LIBOR rate plus 1%. As of December 31, 1997, the notes
receivable from the Yogoslavian government were approximately $145,431,000.
Additionally, sales of approximately $140,700,000 under the above
agreements were made to Velefarm, an affiliated entity, acting as agent for
the Yugoslavian government. The Yugoslavian government's willingness to
provide the Company protection against devaluation on its receivables in
exchange for longer payments terms reflected the strict adherence to
government policy on controlling inflation by limiting the amount of hard
currency in circulation. This policy was initially established with the
start of the stabilization program in 1994. As of December 31, 1997, ICN
Yugoslavia had a net monetary asset position of $60,000,000.
On April 1, 1998, the Yugoslavian government devalued the dinar from a
rate of 6.0 dinars per $1 to 10.92 dinars per $1. The devaluation will
result in a foreign exchange loss in the second quarter of 1998 that will
be based on the net monetary asset exposure as of April 1, 1998. The
Company is currently determining the amount of the loss; however, based on
the net monetary asset exposure of approximately $60,000,000 as of December
31, 1997, the devaulation would result in a foreign exchange loss of
approximately $27,000,000. The Company will take actions to reduce the
impact of the devaluation, which will include the immediate application for
price increases.
With 80% of ICN Yugoslavia's sales arising from government or
government-funded entities in 1997, ICN Yugoslavia is financially dependent
on the Yugoslavian government. During 1997, other than the Yugoslavian
government or government-funded entities, no other customers represented
more than 10% of total sales or accounts receivable.
ICN Yugoslavia is subject to price controls in Yugoslavia. The size
and frequency of government-approved price increases are influenced by
local inflation, devaluations, cost of imported raw materials and demand
for ICN Yugoslavia products. During 1996 and 1997, ICN Yugoslavia received
no price increases due to relatively lower levels of inflation. In response
to the devaluation of the dinar, ICN Yugoslavia will apply immediately for
price increases, although there can be no assurance that the Company will
receive price increases or that any price increases obtained will be
sufficient to offset the effects of the devaluation. As inflation rises,
the size and frequency of price increases are expected to increase. Price
increases obtained by ICN Yugoslavia are based on economic events preceding
such an increase and not on expectations of ongoing inflation. This lag in
permitted price increases creates downward pressure on the gross margins
that ICN Yugoslavia receives on its products. When necessary, ICN
Yugoslavia will limit sales of products that have poor margins until an
acceptable price increase is received. The impact of an inability to obtain
adequate price increases in the future could have an adverse impact on the
Company as a result of declining gross profit margins or declining sales in
an effort to maintain existing gross margin levels.
RISK OF OPERATIONS IN RUSSIA, EASTERN EUROPE AND CHINA
The Company has invested a total of approximately $28,404,000 for
majority interests in five pharmaceutical companies located in Russia. In
addition, the Company is planning to invest $300,000,000 in Russia over the
next five years, including $47,000,000 for the construction of a new
pharmaceutical plant in connection with its modernization of ICN Oktyabr.
The Company also has invested approximately $23,600,000 in its 67% interest
in ICN Hungary. In October 1997, the Company invested approximately
$33,700,000, and 48,000 shares of Common Stock valued at $1,709,000 to be
issued to certain employees, in an 80% interest in Rzeszow, a
pharmaceutical company located in Poland, and has committed to invest an
additional $20,000,000 in 1998 and 1999, which will give the Company a 90%
interest in Rzeszow. In January 1997, ICN China, Inc. ("ICN China"), a
wholly-owned subsidiary of the Company, commenced operations of a
pharmaceutical company under a joint venture with Wuxi Pharmaceutical
Corporation, a Chinese state-owned pharmaceutical corporation. Under the
agreement, ICN China agreed to invest an aggregate of $24,000,000 in cash
over three years, primarily for the construction of a new pharmaceutical
production plant and the purchase of related machinery and equipment.
Although the Company believes that investment in Russia, Eastern Europe,
China and other emerging markets offers access to growing world markets,
the economic and political conditions in such countries are uncertain. See
"-- Dependence on Foreign Operations."
RISK OF OPERATIONS IN MEXICO
During the last three years, the cumulative inflation rate in Mexico
has exceeded 100%. In 1997, the Company began translating the financial
statements of its operations in Mexico using accounting methods that apply
to hyperinflationary economies, resulting in a foreign exchange loss of
approximately $400,000. At December 31, 1997, Mexico had a net monetary
asset position of approximately $6,719,000, which would be subject to loss
if a devaluation were to occur.
NO ASSURANCE OF SUCCESSFUL DEVELOPMENT AND
COMMERCIALIZATION OF FUTURE PRODUCTS
The Company's future growth will depend, in large part, upon its
ability to develop or obtain and commercialize new products and new
formulations of or indications for current products. The Company is engaged
in an active research and development program involving compounds owned by
the Company or licensed from others which the Company may, in the future,
desire to develop commercially. There can be no assurance that the Company
will be able to develop or acquire new products, obtain regulatory
approvals to use such products for proposed or new clinical indications in
a timely manner, manufacture its potential products in commercial volumes
or gain market acceptance for such products. In addition, the Company may
require financing over the next several years to fund costs of development
and acquisitions of new products and, if Virazole(R) is approved for
treatment of chronic hepatitis C in Combination Therapy (for which there
can be no assurance), to expand the production and marketing of Virazole(R)
in the countries of the European Union, where the Company has retained
co-marketing rights under the License Agreement. It may be desirable or
necessary for the Company to enter into licensing arrangements with other
pharmaceutical companies in order to market effectively any new products or
new indications for existing products such as the License Agreement with
Schering for the marketing of Virazole(R) for Combination Therapy (if
approved). There can be no assurance that the Company will be successful in
raising such additional capital or entering into such marketing
arrangements, if required, or that such capital will be raised, or such
marketing arrangements will be, on terms favorable to the Company.
LIMITED PATENT PROTECTION
The Company may be dependent on the protection afforded by its patents
relating to Virazole(R) and no assurance can be given as to the breadth or
degree of protection which these patents will afford the Company. The
Company has patent rights in the United States expiring in 1999 relating to
the use of Virazole(R) to treat specified human viral diseases. If future
development of Virazole(R) in combination with interferon is successful and
approval granted in the United States, an additional award of exclusivity
should be granted of up to three years from the date of approval
(Waxman-Hatch Act). The Company has patents in certain foreign countries
covering use of Virazole(R) in the treatment of certain diseases which
expire at various times through 2006. The Company has no, or limited,
patent rights with respect to Virazole(R) and/or its use in certain foreign
countries where Virazole(R) is currently, or in the future may be, approved
for commercial sale, including France, Germany and Great Britain. However,
it is expected that the Company will be granted a favorable review
classification (Centralized Procedure) for Virazole(R) as a treatment for
chronic hepatitis C in all European Union countries (including France,
Germany, Italy and Great Britain). As a result, approval of the application
of Virazole(R) for treatment of chronic hepatitis C (if such approval is
granted) could, in the European Union, provide the Company up to ten years
of protection, from the date of such approval of the application, against
generic substitutes of Virazole(R) for treatment of chronic hepatitis C.
Such protection would require each generic application to provide original
clinical and preclinical data supporting its approval without referencing
data in the Virazole(R) submission. However, there can be no assurance that
the loss of the Company's patent rights with respect to Virazole(R) upon
expiration of the Company's patent rights in the United States, Europe and
elsewhere will not result in competition from other drug manufacturers or
will not otherwise have a significant adverse effect upon the business and
operations of the Company.
Marketing approvals in certain foreign countries provide an additional
level of protection for products approved for sale in such countries. As a
general policy, the Company expects to seek patents, where available, on
inventions concerning novel drugs, techniques, processes or other products
which it may develop or acquire in the future. However, there can be no
assurance that any patents applied for will be granted, or that, if
granted, they will have commercial value or as to the breadth or the degree
of protection which these patents, if issued, will afford the Company. The
Company intends to rely substantially on its unpatented proprietary
know-how, but there can be no assurance that others will not develop
substantially equivalent proprietary information or otherwise obtain access
to the Company's know-how. Patents for pharmaceutical compounds are not
available in certain countries in which the Company markets its products.
Many of the names of the Company's products are registered trademarks
in the United States, Yugoslavia, Mexico, Canada, Spain, The Netherlands
and other countries. The Company anticipates that the names of future
products will be registered as trademarks in the major markets in which it
will operate. Other organizations may in the future apply for and be issued
patents or own proprietary rights covering technology which may become
useful to the Company's business. The extent to which the Company, at some
future date, may need to obtain licenses from others is not known.
UNCERTAIN IMPACT OF ACQUISITION PLANS
The Company intends aggressively to continue its strategy of targeted
expansion through the acquisition of compatible businesses and product
lines and the formation of strategic alliances, joint ventures and other
business combinations. Should the Company complete any material
acquisition, the Company's success or failure in integrating the operations
of the acquired company may have a material impact on the future growth or
success of the Company. Since some or all of these potential acquisitions
may be affected with the issuance of Common Stock by the Company to the
sellers of the businesses being acquired or financed with the issuance of
Common Stock or securities convertible into Common Stock, the interest of
existing stockholders in the Company may be diluted (which dilution may be
material depending on the size and the number of acquisitions consummated).
Subject to sufficient authorized and unissued shares of Common Stock being
available, no stockholder approval of any acquisition transaction would be
required unless the number of shares of Common Stock issued by the Company
in connection with the transaction (or series of related transactions) were
to exceed 20% of the then outstanding shares of Common Stock.
POTENTIAL LITIGATION EXPOSURE
Pursuant to an Order Directing Private Investigation and Designating
Officers to Take Testimony, entitled In the Matter of ICN Pharmaceuticals,
Inc., (P-177) (the "Order"), a private investigation is being conducted by
the SEC with respect to certain matters pertaining to the status and
disposition of the Hepatitis C NDA. As set forth in the Order, the
investigation concerns whether, during the period from June 1994 through
February 1995, the Company, persons or entities associated with it and
others, in the offer and sale or in connection with the purchase and sale
of ICN securities, engaged in possible violations of Section 17(a) of the
Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5
thereunder, by having possibly: (i) made false or misleading statements or
omitted material facts with respect to the status and disposition of the
Hepatitis C NDA; (ii) purchased or sold Common Stock while in possession of
material, non-public information concerning the status and disposition of
the Hepatitis C NDA; or (iii) conveyed material, non-public information
concerning the status and disposition of the Hepatitis C NDA, to other
persons who may have purchased or sold Common Stock. The Company has
cooperated with the Commission in its investigation. On January 13, 1998,
ICN received a letter from the SEC's Philadelphia District Office (the
"District Office") stating the District Office's intention to recommend to
the Commission that it authorize the institution of a civil action against
the Company and Milan Panic, Chairman and Chief Executive Officer of the
Company. As set forth in the letter, the District Office seeks the
authority to commence a civil action to enjoin the Company from future
violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder
and to impose a civil penalty of up to $500,000 on ICN. In regard to Mr.
Panic, the District Office seeks the authority to begin a civil action (i)
to enjoin Mr. Panic from future violations of Section 17(a) of the
Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5
thereunder; (ii) for disgorgement of approximately $390,000; (iii) for
prejudgment interest; (iv) for a civil penalty pursuant to Section 21A of
the Exchange Act that cannot exceed three times any amount disgorged and
(v) for an officer and director bar pursuant to Section 21 of the Exchange
Act. On January 30, 1998, the Company filed submissions with the Commission
urging that it reject the District Office's request.
The Company has received Subpoenas (the "Subpoenas") from a Grand Jury
in the United States District Court, Central District of California
requesting the production of documents covering a broad range of matters
over various time periods. In March 1998, the Company was advised that the
office of the United States Attorney for the Central District of California
is considering the Company, Mr. Panic and a former officer of the Company
targets of the investigation. The Company was also advised that certain
current and former officers of the Company are considered subjects of the
investigation. The Company has and continues to cooperate in the Grand Jury
Investigation. A number of current and former employees of the Company have
been interviewed by the government in connection with the investigation.
DEPENDENCE ON KEY PERSONNEL
The Company believes that its continued success will depend to a
significant extent upon the efforts and abilities of its management,
including Milan Panic, its Chairman and Chief Executive Officer. The loss
of the services of its management could have a material adverse effect on
the Company. The Company cannot predict what effect, if any, the
Commission's investigation of the Company, as described under " --
Potential Litigation Exposure," the Subpoena and the possibility of a civil
action against the Company and/or Mr. Panic, as described under " --
Potential Litigation Exposure," may have on Mr. Panic's ability to continue
to devote services on a full time basis to the Company. See " -- Potential
Litigation Exposure". In addition, Mr. Panic, who served as Prime Minister
of Yugoslavia from July 1992 to March 1993, remains active in Yugoslavian
politics and may again serve in a governmental office in the future.
POTENTIAL PRODUCT LIABILITY EXPOSURE AND LACK OF INSURANCE
The Company could be exposed to possible claims for personal injury
resulting from allegedly defective products. Even if a drug were approved
for commercial use by an appropriate governmental agency, there can be no
assurance that users will not claim that effects other than those intended
may result from the Company's products. The Company generally self-insures
against potential product liability exposure with respect to its marketed
products, including Virazole(R). While to date no material adverse claim
for personal injury resulting from allegedly defective products, including
Virazole(R), has been successfully maintained against the Company or any of
its predecessors, a substantial claim, if successful, could have a material
adverse effect on the Company.
GOVERNMENT REGULATION
FDA approval must be obtained in the United States and approval must
be obtained from comparable agencies in other countries prior to marketing
or manufacturing new pharmaceutical products for use by humans in such
respective jurisdictions. Obtaining FDA approval for new products and
manufacturing processes can take a number of years and involves the
expenditure of substantial resources. Numerous requirements must be
satisfied, including preliminary testing programs on animals and subsequent
clinical testing programs on humans, to establish product safety and
efficacy. No assurance can be given that authorization of the commercial
sale of any new drugs or compounds by the Company for any application or of
existing drugs or compounds for new applications will be secured in the
United States or any other country, or that, if such authorization is
secured, those drugs or compounds will be commercially successful.
The FDA in the United States and other regulatory agencies in other
countries also periodically inspect manufacturing facilities. Failure to
comply with applicable regulatory requirements can result in, among other
things, sanctions, fines, delays or suspensions of approvals, seizures or
recalls of products, operating restrictions and criminal prosecutions.
Furthermore, changes in existing regulations or adoption of new regulations
could prevent or delay the Company from obtaining future regulatory
approvals.
The Company is subject to price control restrictions on its
pharmaceutical products in the majority of countries in which it operates.
To date, the Company has been affected by pricing adjustments in Spain and
by the lag in allowed price increases in Yugoslavia and Mexico, which have
created lower sales in U.S. dollars and reductions in gross profit. Future
sales and gross profit could be materially affected if the Company is
unable to obtain price increases commensurate with the levels of inflation.
COMPETITION
The Company operates in a highly competitive environment. The
Company's competitors, many of whom have substantially greater capital
resources and marketing capabilities and larger research and development
staffs and facilities than the Company, are actively engaged in marketing
products similar to those of the Company and in developing new products
similar to those proposed to be developed and sold by the Company. Others
may succeed in developing products that are more effective than those
marketed or proposed for development by the Company. Progress by other
researchers in areas similar to those being explored by the Company may
result in further competitive challenges. In early 1996, MedImmune, Inc.
began marketing in the United States RespiGam(R), a prophylactic drug for
the treatment of RSV. The Company is aware of several other ongoing
research and development programs which are attempting to develop new
prophylactic and therapeutic products for treatment of RSV. Although the
Company will follow publicly disclosed developments in this field, on the
basis of currently available data, it is unable to evaluate whether
RespiGam(R) or the other technology being developed in these programs poses
a threat to the Company's current market position in the treatment of RSV
or its revenue streams. In addition, a number of companies and researchers
are engaged in developmental efforts for the treatment of Hepatitis C,
including through the use of protease inhibitors. The Company may also face
increased competition from manufacturers of generic pharmaceutical products
when certain of the patents covering certain of its currently marketed
products expire.
INDEBTEDNESS AND OTHER OBLIGATIONS OF THE COMPANY
As of December 31, 1997, after giving effect to the redemption of
certain indebtedness of the Company in November 1997 (see "Recent
Developments") and repayment of indebtedness related to the Company's
acquisition of a plant in Puerto Rico, the Company had outstanding
long-term debt of $315,088,000. The indenture for certain of the Company's
debt contains, and other debt instruments of the Company may in the future
contain, a number of significant covenants that, among other things,
restrict the ability of the Company to dispose of assets, incur additional
indebtedness, repay other indebtedness or amend other debt instruments, pay
dividends, create liens on assets, enter into investments or acquisitions,
engage in mergers or consolidations, make capital expenditures or engage in
certain transactions with subsidiaries and affiliates, and otherwise
restrict certain corporate activities. The Company's strategy contemplates
continued strategic acquisitions, and a portion of the cost of such
acquisitions may be financed through additional indebtedness. There can be
no assurance that financing will continue to be available on terms
acceptable to the Company or at all. In the absence of such financing, the
Company's ability to respond to changing business and economic conditions,
to fund scheduled investments and capital expenditures, to make future
acquisitions or developments and to absorb adverse operating results may be
adversely affected.
RECENT DEVELOPMENTS
On April 1, 1998, the Yugoslavian government devalued the dinar from a
rate of 6.0 dinars per $1 to 10.92 dinars per $1. The devaluation will
result in a foreign exchange loss in the second quarter of 1998 that will
be based on the net monetary asset exposure as of April 1, 1998. The
Company is currently determining the amount of the loss; however, based on
the net monetary asset exposure of approximately $60,000,000 as of December
31, 1997, the devaluation would result in a foreign exchange loss of
approximately $27,000,000. The Company will take actions to reduce the
impact of the devaluation, which will include the immediate application for
price increases. See "Risk Factors - Risk of Operations in Yugoslavia."
On February 24, 1998, the Company acquired the SKB Product Rights from
SKB. The Company received the SKB Product Rights in exchange for
$45,500,000 payable in a combination of $22,500,000 in cash and 821 shares
of Series D Preferred Stock initially convertible into 615,750 Shares
valued at $23,000,000. Except under certain circumstances, SKB has agreed
not to sell the Shares until November 4, 1999. The Company has agreed to
pay SKB an additional amount in a combination of cash and Series D
Preferred Stock (or, under certain circumstances, shares of Common Stock)
to the extent proceeds received by SKB from the sale of the Shares during a
specified period from November 4, 1999 through December 2, 1999 and the
then market value of the unsold Shares do not provide SKB with an average
value of $46.00 per share (including any dividend paid on the Shares to
SKB). Alternatively, SKB is required to pay the Company an amount, in cash
or shares of Common Stock, to the extent that such proceeds and market
value provide SKB with an average per share value in excess of $46.00 per
share (including any dividend paid on the Shares to SKB). See "Selling
Shareholder."
In February 1998, the Company committed to investing $300,000,000 in
Russia over the next five years, $47,000,000 of which will be used for the
construction of a new pharmaceutical plant in connection with its
modernization of ICN Oktyabr. The new factory, the construction of which is
expected to be completed in 2000, will comply with Good Manufacturing
Practice (GMP) Standards. See "The Company."
USE OF PROCEEDS
Since this Prospectus relates to the offering of Shares by SKB, the
Company will not receive any of the proceeds from the sale of the Shares
offered hereby. However, under certain circumstances, SKB will be required
to pay to the Company the amount, if any, by which the Current Market Price
for the Common Stock (as defined herein) exceeds certain agreed upon price
thresholds. Conversely, under certain circumstances, the Company will be
required to pay SKB the amount, if any, by which the Current Market Price
for the Common Stock (as defined herein) is less than certain agreed upon
price thresholds. See "Selling Stockholder - Price Guarantee."
The transfer agent for the Common Stock is the American Stock Transfer
& Trust Company unless and until a successor is selected by the Company.
SELLING STOCKHOLDER
General
On February 24, 1998, the Company issued to SKB 821 shares of Series D
Preferred Stock in connection with the Company's acquisition of the SKB
Product Rights pursuant to the Agreement for the Sale and Purchase of a
Portfolio of Pharmaceutical, OTC and Consumer Healthcare Products (the
"Sale and Purchase Agreement") between the Company and SKB. The shares of
Common Stock issuable upon the conversion of the Series D Preferred Stock
and an undetermined number of additional shares of Common Stock issuable as
a result of any adjustments to the conversion price of the Series D
Preferred Stock pursuant to the antidilution provisions of the Certificate
of Designation are being offered for the account of SKB. Because SKB may
sell all or part of the Shares that it holds pursuant to this Prospectus
and because this Offering is not being underwritten on a firm commitment
basis, no estimate can be given as to the amount of Shares that will be
held by SKB upon termination of this Offering. See "Plan of Distribution."
As of April 2, 1998 the Company had 71,844,226 shares of Common Stock
outstanding. The shares of Common Stock issuable to SKB upon conversion of
the Series D Preferred Stock, if such Series D Preferred Stock had been
converted on April 2, 1998, would have represented less than 1% of the
outstanding shares of Common Stock.
The Series D Preferred Stock was issued to SKB under the terms of the
Sale and Purchase Agreement. The following summary of certain provisions of
the Sale and Purchase Agreement relating to the Shares is not intended to
be complete and is subject to and qualified in its entirety by reference to
the Sale and Purchase Agreement and exhibits thereto, a copy of which is
attached as an exhibit to this Registration Statement and is incorporated
herein by reference.
Pursuant to the terms of the Sale and Purchase Agreement, except in
matters that may have an adverse effect, directly or indirectly, on the
Series D Preferred Stock, holders of shares of Series D Preferred Stock are
required to vote the Series D Preferred Stock in the same proportion and in
the same manner as all other shares of ICN which are actually voted on such
matter, except in the event of certain acceleration events.
Registration Rights
The registration effected hereby is being effected pursuant to certain
registration rights granted by the Company at the time of the closing of
the transactions under the Sale and Purchase Agreement. The registration
rights may be assigned by SKB to certain transferees and assigns of the
Shares; provided that the Company is given notice at the time of such
transfer and the transferee or assignee agrees to be bound by the
Registration Rights Agreement by and between SKB and the Company (the
"Registration Rights Agreement"). If applicable, this Offering would
include sales of Shares by such transferees and assigns. This description
of the registration rights is a summary and as such is not intended to be
complete and is subject to and qualified in its entirety by reference to
the Registration Rights Agreement, a copy of which is attached as an
exhibit to this Registration Statement and is incorporated herein by
reference.
Price Guaranty
The Company has agreed to pay SKB an additional amount in a
combination of cash and Series D Preferred Stock (or, under certain
circumstances, shares of Common Stock) to the extent proceeds received by
SKB from the sale of the Shares during a 20 Trading Day (as defined herein)
period from and after November 4, 1999 (the "Settlement Period") and the
then market value of the unsold Shares do not provide SKB with an average
value of $46.00 per share (the "Final Guaranteed Price") (including any
dividend paid on the Shares). Alternatively, SKB is required to pay the
Company an amount, in cash or shares of Common Stock, to the extent that
such proceeds and market value provide SKB with an average per share value
in excess of the Final Guaranteed Price (including any dividend paid on the
Shares). The Company must pay an "Interim Payment" to SKB not later than 10
business days following December 31, 1998 (the "Initial Guarantee Date"),
if the Current Market Price (as defined herein) of the Common Stock is less
than $41.44 (the "Initial Guaranteed Price"). The "Current Market Price"
is the closing price of the Common Stock for each of the five consecutive
Trading Days (as defined herein) immediately prior to the Initial Guarantee
Date, or the last Trading Day of the Settlement Period (the "Final
Guarantee Date"), as applicable. A "Trading Day" is a trading day on the
NYSE and Chicago Board Option Exchange (in each case other than a day on
which trading on such exchange is scheduled to close prior to its regular
closing time).
The Initial Guaranteed Price and the Final Guaranteed Price (jointly
the "Guaranteed Prices") are subject to certain anti-dilution adjustments,
including if the Company issues additional shares of Common Stock pursuant
to a stock dividend, stock distribution or subdivision, or the outstanding
shares of Common Stock are combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common Stock or in the event
of any other event which would give rise to an adjustment of the conversion
price of the Series D Preferred Stock pursuant to the Certificate of
Designation.
Final Conversion Date
Not later than November 3, 1999, SKB must convert all of the shares of
Series D Preferred Stock then held by SKB into Common Stock and, subject to
the restrictions on transfer described herein, may in its sole discretion
during the Settlement Period sell any or all of such Shares in one or more
transactions.
Limits on Increase of SKB's Holding Percentage
The Company may not redeem, repurchase or otherwise acquire any shares
of Common Stock or any other class of capital stock of ICN or take any
other action affecting such shares (other than such action taken at the
request of SKB or unless SKB waives its rights in writing), if such action
would increase the percentage of outstanding shares of Common Stock owned
by SKB (excluding shares of Common Stock acquired and held by SKB
independent of the Sale and Purchase Agreement) to greater than 4.9%,
assuming conversion of the Series D Preferred Stock held by SKB. If this
requirement limits the Company's ability to deliver Additional Shares (as
defined herein) that are otherwise due to SKB, the Company must pay SKB a
cash amount equal to the difference between the payment then due and the
value of the Additional Shares. "Additional Shares" means shares of Series
D Preferred Stock, other than the shares of Series D Preferred Stock
delivered by the Company to SKB at the completion of the sale and purchase
of the SKB Product Rights and other assets pursuant to the Sale and
Purchase Agreement (the "Original Preferred Stock"), and shares of Common
Stock into which the Original Preferred Stock may be converted (the
"Original Common Stock").
Restrictions on Transfer
Prior to November 1, 1999, SKB (1) may not sell the Shares or the
Series D Preferred Stock without the Company's prior written consent unless
the net price to be received by SKB would exceed $50.00, or (2) effect any
sales of Common Stock on any Trading Day unless sales would satisfy the
conditions of Exchange Act Rule 10b-18(b)(4)(i); except, however, that the
requirement to conduct sales in compliance with Rule 10b-18 will not apply
to sales of no more than 45,000 shares of Common Stock on any Trading Day,
or no more than 75,000 shares of Common Stock on any Trading Day if the
price of the Common Stock on the NYSE on the previous Trading Day was less
than $18.68.
As of April 2, 1998, the Company had outstanding approximately
71,844,226 shares of Common Stock. The Shares to be sold by SKB represent
in the aggregate less than 1% of the outstanding shares of Common Stock.
PLAN OF DISTRIBUTION
This Prospectus has been prepared for the benefit of SKB and SKB is
offering the shares for its own account and not for the account of the
Company. There can be no assurance that SKB will sell any or all of the
Shares offered hereunder. The Company will not receive any proceeds from
the sale of the shares, except to the extent that under certain
circumstances SKB is required to pay the Company the amount, if any, by
which the applicable Current Market Price (as defined herein) is more than
$46.00. The "Current Market Price" means, for the Initial Guarantee Date or
the Final Guarantee Date (each a "Guarantee Date"), the average of the
closing prices for the Common Stock on the NYSE for the five Trading Days
immediately prior to such Guarantee Date.
The Shares may be sold from time to time by SKB or by its transferees
and assigns. Such sales may be made in the over-the-counter market, on the
NYSE or other exchanges (if the Common Stock is listed for trading
thereon), or otherwise at prices and at terms then prevailing, at prices
related to the then current market price or at negotiated prices. The
Shares may be sold by any one or more of the following methods: (a) a block
trade in which the broker or dealer so engaged will attempt to sell the
securities as agent but may position and resell a portion of the block as
principal to facilitate the transaction; (b) purchases by a broker as
principal and resale by such broker or dealer for its account; (c) ordinary
brokerage transactions and transactions in which the broker solicits
purchasers; and (d) privately negotiated transactions. In addition, any
Shares that qualify for sale pursuant to Rule 144 may be sold under Rule
144 rather than pursuant to this Prospectus.
SKB and any broker-dealers, agents or underwriters that participate
with SKB in the distribution of the Shares may be deemed to be
"underwriters" within the meaning of the Securities Act and any commissions
received by such broker-dealer, agent or underwriter and any profit on the
resale of the Shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
Under the Exchange Act and the regulations thereunder, any person
engaged in a distribution of the Common Stock offered by this Prospectus
may not simultaneously engage in market making activities with respect to
the Common Stock, during any applicable "restricted period" prior to the
commencement of such distribution. In addition, and without limiting the
foregoing, SKB will be subject to applicable provisions of the Exchange Act
and the rules and regulations thereunder including, without limitation,
Regulation M, the provisions of which may limit the timing of purchases and
sales of Common Stock by SKB.
In the Registration Rights Agreement, the Company has agreed to
indemnify and hold harmless SKB and each of its directors, officers,
employees and agents and any other person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, SKB, within the meaning of the Securities Act or the
Exchange Act, and any underwriter and each person who controls such
underwriter within the meaning of the Securities Act or the Exchange Act
(each an "Indemnified Party") with respect to registration, qualification
or compliance effected pursuant to the Registration Rights Agreement,
against all claims, losses, damages and liabilities (or actions in respect
thereof), whether joint or several, to which they or any of them may become
subject under the Securities Act, the Exchange Act or other federal or
state statutory law or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based on any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus, offering
circular or other document, any related registration statement,
notification or the like as originally filed or any amendment thereof or
supplement thereto (collectively "Offering Documents") incident to any such
registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein (in the case of a
prospectus, in light of the circumstances under which they were made) not
misleading, or any violation by the Company of the Securities Act or the
Exchange Act or any rule or regulation thereunder applicable to the Company
and relating to action or inaction required of the Company in connection
with any such registration, qualification or compliance, and will reimburse
any such Indemnified Party and any person that, directly or indirectly, is
in control of, is controlled by, or is under common control with such
Indemnified Party (an "Affiliate") as incurred for any legal and any other
expenses reasonably incurred in connection with investigating and defending
any such claims, loss, damage, liability or action, provided that the
Company will not be liable in any such case to indemnify any such
Indemnified Party to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission based upon written information furnished to the Company by such
Indemnified Party and stated to be specifically for use therein.
SKB has agreed, if Shares held by it are included in the securities as
to which any registration, qualification or compliance is being effected
pursuant to the Registration Rights Agreement, to indemnify and hold
harmless the Company and each of its directors, officers, employees and
agents, and any other person that directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common control
with, the Company, within the meaning of the Securities Act or the Exchange
Act, any underwriter and each person who controls such underwriter, within
the meaning of the Securities Act or the Exchange Act with respect to
registration, qualification, or compliance effected pursuant to the
Registration Rights Agreement, against all claims, losses, damages and
liabilities (or actions in respect thereof) joint or several, to which they
or any of them may become subject under the Securities Act, the Exchange
Act or other federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based on any untrue
statement (or alleged untrue statement) of a material fact contained in
that portion of any such Offering Documents relating to information
concerning SKB, which was furnished by SKB to the Company in writing and
stated to be specifically for use therein or any omission (or alleged
omission) to state in such portion thereof a material fact required to be
stated therein or necessary to make the statements therein (in the case of
a prospectus, in light of the circumstances under which they were made) not
misleading, and will reimburse any such Indemnified Party and its
Affiliates as incurred for any legal or any other expenses reasonably
incurred in connection with investigating or defending any such claim,
loss, damage, liability or action, in each case to the extent, but only to
the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such Offering Documents in
reliance upon and in conformity with written information furnished to the
Company by SKB and stated to be specifically for use therein, provided,
however, that the obligations of SKB may not exceed an amount equal to the
lesser of: (i) the net proceeds to SKB of Shares sold pursuant to such
Offering Document, or, for the Initial Guarantee Date, the product of (A)
$41.14 per share and (B) the Remaining Shares (as defined herein) held by
SKB on the Initial Guarantee Date; and for the Final Guarantee Date the
product of (X) $46.00 and (Y) the Remaining Shares held by SKB at the close
of trading on the NYSE on the Trading Day immediately preceding November 4,
1999. "Remaining Shares" means, as of any date of determination, (1) the
number of shares of Common Stock into which shares of Original Preferred
Stock owned by SKB on a Guarantee Date are then convertible and (2) shares
of Original Common Stock then held by SKB.
To the extent required, the Company will use its best efforts to file,
during any period in which exchanges are being made, one or more
supplements to this Prospectus to describe any material information with
respect to the plan of distribution not previously disclosed in this
Prospectus or any material change to such information in this Prospectus.
The registration effected hereby is being effected pursuant to certain
registration rights previously granted by the Company to SKB in the
Registration Rights Agreement. The Company will bear all of the expense of
such registration, other than underwriting discounts and selling
commissions applicable to the sale of the Shares and fees and disbursements
of counsel, financial and other advisors for SKB.
LEGAL MATTERS
The legality of the Common Stock offered hereby will be passed upon
for the Company by David C. Watt, Executive Vice President, General Counsel
and Corporate Secretary of the Company. As of April 2, 1998, Mr. Watt
beneficially owned 149,511 shares of Common Stock, including 146,518 shares
which he has the right to acquire upon the exercise of currently
exercisable stock options.
EXPERTS
The consolidated balance sheets of the Company as of December 31, 1997
and 1996 and the consolidated statements of income, stockholders' equity
and cash flows of the Company for each of the three years in the period
ending December 31, 1997, incorporated by reference in this Registration
Statement, have been incorporated herein in reliance on the report, which
includes an emphases of a matter paragraph related to the Company's net
monetary assets at ICN Yugoslavia which would be subject to foreign
exchange loss if a devaluation of the Yugoslavian dinar were to occur, of
Coopers & Lybrand L.L.P., independent accountants, given on the authority
of that firm as experts in accounting and auditing.
The special-purpose statement of net sales and direct expenses for the
year ended December 31, 1996 of certain products of F. Hoffmann-La Roche
Ltd., Hoffmann-La Roche Inc., and Roche Products Inc. (the "Products"),
incorporated by reference in this Registration Statement, has been
incorporated herein in reliance on the report of Price Waterhouse LLP,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED
IN THIS PROSPECTUS, IN CONNECTION WITH THIS OFFERING, AND, IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE OF THIS PROSPECTUS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses of the
Registrant in connection with the distribution of the securities being
registered hereunder. SKB will not bear any of these expenses.
SEC Filing Fee........................................$14,908.27
Legal Fees and Expenses...............................$20,000.00
Accounting Fees and Expenses..........................$20,000.00
Miscellaneous.........................................$ 5,000.00
----------
Total .................................$59,908.27
==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of Delaware empowers a
corporation to indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative by
reason of the fact that he or she is or was a director, officer, employee
or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation or enterprise. Depending on the character of the proceeding, a
corporation may indemnify against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred in connection with such action, suit or proceeding if the person
indemnified acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the corporation,
and with respect to any criminal action or proceeding, had no cause to
believe his or her conduct was unlawful. In the case of an action by or in
the right of the corporation, no indemnification may be made in respect to
any claim, issue or matter as to which such person shall have been adjudged
to be liable to the corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought
shall determine that despite the adjudication of liability such person is
fairly and reasonably entitled to indemnity for such expenses which the
court shall deem proper.
Section 145 further provides that to the extent a director or officer
of a corporation has been successful in the defense of any action, suit or
proceeding referred to above or in the defense of any claim, issue or
matter therein, he or she shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him or her in
connection therewith. However, if the director or officer is not successful
in the defense of any action, suit or proceeding as referred to above or in
the defense of any claim, issue or matter therein, he shall only be
indemnified by the corporation as authorized in the specific case upon a
determination that indemnification is proper because he or she met the
applicable standard set forth above as determined by a majority of the
disinterested Board of Directors or by the stockholders.
The Registrant's bylaws provide indemnification to its officers and
directors against liability they may incur in their capacity as such, which
indemnification is similar to that provided by Section 145, unless a
determination is reasonably and promptly made by a majority of the
disinterested Board of Directors that the indemnitee acted in bad faith and
in a manner that the indemnitee did not believe to be in or not opposed to
the best interests of the Registrant, or, with respect to any criminal
proceeding, that the indemnitee believed or had reasonable cause to believe
that his or her conduct was unlawful.
The Registrant carries directors' and officers' liability insurance,
covering losses up to $5,000,000 (subject to a $500,000 deductible).
The Registrant, as a matter of policy, enters into indemnification
agreements with its directors and officers indemnifying them against
liability they may incur in their capacity as such. The indemnification
agreements require no specific standard of conduct for indemnification and
make no distinction between civil and criminal proceedings, except in
proceedings where the dishonesty of an indemnitee is alleged. Such
indemnification is not available if an indemnitee is adjudicated to have
acted in a deliberately dishonest manner with actual dishonest purpose and
intent where such acts were material to the adjudicated proceeding.
Additionally, the indemnity agreements provide indemnification for any
claim against an indemnitee where the claim is based upon the indemnitee
obtaining personal advantage or profit to which he or she was not legally
entitled, the claim is for an accounting of profits made in connection with
a violation of Section 16(b) of the Securities Exchange Act of 1934, or
similar state law provision, or the claim was brought about or contributed
to by the dishonesty of the indemnitee.
Section 102(b)(7) of the Delaware General Corporation Law, as amended,
permits a corporation to include in its certificate of incorporation a
provision eliminating or limiting the personal liability of a director to
the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, provided that such provision shall not
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) under Section 174 of the Delaware
General Corporation Law (relating to unlawful payment of dividend and
unlawful stock purchase and redemption), or (iv) for any transaction from
which the director derived an improper personal benefit. The Registrant has
provided in its certificate of incorporation, as amended, that its
directors shall be exculpated from liability as provided under Section
102(b)(7).
The foregoing summaries are necessarily subject to the complete text
of the Delaware General Corporation Law, the Registrant's Certificate of
Incorporation and the agreements referred to above and are qualified in
their entirety by reference thereto.
ITEM 16. EXHIBITS
4.1 Amended and Restated Certificate of Incorporation of Registrant,
previously filed as Exhibit 3.1 to Registration Statement No.
33-83952 on Form S-1, which is incorporated herein by reference, as
amended by the Certificate of Merger, dated November 10, 1994, of
ICN Pharmaceuticals, Inc., SPI Pharmaceuticals, Inc., and Viratek,
Inc. with and into ICN Merger Corp., previously filed as Exhibit 4.1
to Registration Statement No. 333-08179 on Form S-3, which is
incorporated herein by reference.
4.2 Bylaws of the Registrant, previously filed as Exhibit 3.2 to
Registration Statement No. 33-83952 on Form S-1, which is
incorporated herein by reference.
4.3 Form of Rights Agreement, dated as of November 2, 1994 between the
Registrant and American Stock Transfer & Trust Company as Trustee,
previously filed as Exhibit 4.3 to Registration Statement on Form
8-A, dated November 10, 1994, which is incorporated herein by
reference.
4.4 Indenture, dated as of August 14, 1997, by and among ICN and United
States Trust Company of New York relating to $275,000,000 9-1/4 %
Senior Notes Due 2005, previously filed as Exhibit 10.3 to the
Company's Quarterly Report on Form 10-Q for the quarter ended June
30, 1997, which is incorporated herein by reference.*
4.5 Certificate of Designation of Rights and Preferences of Series D
Convertible Preferred Stock (incorporated by reference to the
Company's Annual Report on Form 10-K for the year ended December 31,
1997).
4.6 Registration Rights Agreement by and between the Company and
SmithKline Beecham p.l.c. (incorporated by reference to the
Company's Annual Report on Form 10-K for the year ended December 31,
1997).
5. Opinion of David C. Watt, Executive Vice President, General Counsel
and Corporate Secretary of the Registrant, regarding the legality of
the securities being registered.
10.1. Agreement for the Sale and Purchase of a Portfolio of
Pharmaceutical, OTC and Consumer Healthcare Products (incorporated
by reference to the Company's Annual Report on Form 10-K for the
year ended December 31, 1997).
10.2 Credit Agreement dated as of March 31, 1997 by and between Banque
Nationale de Paris and ICN Pharmaceuticals, Inc. (incorporated by
reference to the Company's Annual Report for the year ended December
31, 1997).
10.3 Second Amendment to Credit Agreement dated as of March 31, 1997 by
and between Banque Nationale de Paris and ICN Pharmaceuticals, Inc.
(incorporated by reference to the Company's Annual Report for the
year ended December 31, 1997).
23.1 Consent of Coopers & Lybrand L.L.P. Independent Public Accountants.
23.2 Consent of David C. Watt (contained in his opinion filed as Exhibit
5).
23.3 Consent of Price Waterhouse LLP Independent Public Accountants.
24. Power of Attorney (included elsewhere in the Registration
Statement).
- ----------------
* None of the other indebtedness of the Registrant exceeds 10% of its
total consolidated assets. The Registrant will furnish copies of the
instruments relating to such other indebtedness upon request.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
provided, however, that paragraphs (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination
of offering.
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to
section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the Registration Statement shall be deemed to
be a new registration relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(5) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in that Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Costa Mesa and State
of California on April 3, 1998.
ICN PHARMACEUTICALS, INC.
/s/ Milan Panic
-----------------------------
By: Milan Panic
Chairman and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Milan Panic and David C. Watt his true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done, as fully
to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any
of them, or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITY INDICATED.
SIGNATURE TITLE DATE
/s/ Milan Panic
- -----------------------------------
Milan Panic Chairman and Chief April 3, 1998
Executive Officer
(Principal Executive
Officer)
/s/ John E. Giordani April 3, 1998
- -----------------------------------
John E. Giordani Executive Vice
President, Chief
Financial Officer
(Principal Financial
and Accounting Officer)
/s/ Norman Barker, Jr.
- -----------------------------------
Norman Barker, Jr. Director April 3, 1998
/s/ Senator Birch E. Bayh, Jr.
- -----------------------------------
Senator Birch E. Bayh, Jr. Director April 3, 1998
/s/ Alan F. Charles
- -----------------------------------
Alan F. Charles Director April 3, 1998
/s/ Roger Guillemin
- -----------------------------------
Roger Guillemin, M.D., Ph.D. Director April 3, 1998
/s/ Adam Jerney
- -----------------------------------
Adam Jerney Director, President, April 3, 1998
Chief Operating
Officer
/s/ Dale M. Hanson
- -----------------------------------
Dale M. Hanson Director April 3, 1998
/s/ Weldon B. Jolley, Ph.D.
- -----------------------------------
Weldon B. Jolley, Ph.D. Director April 3, 1998
/s/ Andrei V. Kozyrev
- -----------------------------------
Andrei V. Kozyrev Director April 3, 1998
/s/ Jean-Francois Kurz
- -----------------------------------
Jean-Francois Kurz Director April 3, 1998
/s/ Thomas H. Lenagh
- -----------------------------------
Thomas H. Lenagh Director April 3, 1998
/s/ Charles T. Manatt
- -----------------------------------
Charles T. Manatt Director April 3, 1998
/s/ Stephen D. Moses
- -----------------------------------
Stephen D. Moses Director April 3, 1998
/s/ Michael Smith, Ph.D.
- -----------------------------------
Michael Smith, Ph.D. Director April 3, 1998
/s/ Roberts A. Smith, Ph.D.
- -----------------------------------
Roberts A. Smith, Ph.D. Director April 3, 1998
/s/ Richard W. Starr
- -----------------------------------
Richard W. Starr Director April 3, 1998
INDEX TO EXHIBITS
4.1 Amended and Restated Certificate of Incorporation of Registrant,
previously filed as Exhibit 3.1 to Registration Statement No.
33-83952 on Form S-1, which is incorporated herein by reference, as
amended by the Certificate of Merger, dated November 10, 1994, of
ICN Pharmaceuticals, Inc., SPI Pharmaceuticals, Inc., and Viratek,
Inc. with and into ICN Merger Corp., previously filed as Exhibit 4.1
to Registration Statement No. 333-08179 on Form S-3, which is
incorporated herein by reference.
4.2 Bylaws of the Registrant, previously filed as Exhibit 3.2 to
Registration Statement No. 33-83952 on Form S-1, which is
incorporated herein by reference.
4.3 Form of Rights Agreement, dated as of November 2, 1994 between the
Registrant and American Stock Transfer & Trust Company as Trustee,
previously filed as Exhibit 4.3 to Registration Statement on Form
8-A, dated November 10, 1994, which is incorporated herein by
reference.
4.4 Indenture, dated as of August 14, 1997, by and among ICN and United
States Trust Company of New York relating to $275,000,000 9-1/4 %
Senior Notes Due 2005, previously filed as Exhibit 10.3 to the
Company's Quarterly Report on Form 10-Q for the quarter ended June
30, 1997, which is incorporated herein by reference.*
4.5 Certificate of Designation of Rights and Preferences of Series D
Convertible Preferred Stock (incorporated by reference to the
Company's Annual Report on Form 10-K for the year ended December 31,
1997).
4.6 Registration Rights Agreement by and between the Company and
SmithKline Beecham p.l.c. (incorporated by reference to the
Company's Annual Report on Form 10-K for the year ended December 31,
1997).
5. Opinion of David C. Watt, Executive Vice President, General Counsel
and Corporate Secretary of the Registrant, regarding the legality of
the securities being registered.
10.1. Agreement for the Sale and Purchase of a Portfolio of
Pharmaceutical, OTC and Consumer Healthcare Products (incorporated
by reference to the Company's Annual Report on Form 10-K for the
year ended December 31, 1997).
10.2 Credit Agreement dated as of March 31, 1997 by and between Banque
Nationale de Paris and ICN Pharmaceuticals, Inc. (incorporated by
reference to the Company's Annual Report for the year ended December
31, 1997).
10.3 Second Amendment to Credit Agreement dated as of March 31, 1997 by
and between Banque Nationale de Paris and ICN Pharmaceuticals, Inc.
(incorporated by reference to the Company's Annual Report for the
year ended December 31, 1997).
23.1 Consent of Coopers & Lybrand L.L.P. Independent Public Accountants.
23.2 Consent of David C. Watt (contained in his opinion filed as Exhibit
5).
23.3 Consent of Price Waterhouse LLP Independent Public Accountants.
24. Power of Attorney (included elsewhere in the Registration
Statement).
- ----------------
* None of the other indebtedness of the Registrant exceeds 10% of its
total consolidated assets. The Registrant will furnish copies of the
instruments relating to such other indebtedness upon request.
Exhibit 5
April 3, 1998
ICN Pharmaceuticals, Inc.
3300 Hyland Avenue
Costa Mesa, California 92626
RE: Registration Statement on Form S-3
ICN Pharmaceuticals, Inc.
Common Stock
----------------------------------
Ladies and Gentlemen:
I am Executive Vice President, General Counsel and Corporate Secretary
of ICN Pharmaceuticals, Inc., a Delaware corporation (the "Company"), and
have been involved with the registration under the Securities Act of 1933,
as amended (the "Act"), of the shares (the "Shares") of common stock, $.01
par value of the Company, being offered pursuant to the above described
Registration Statement.
In connection with the offering of the Shares, I have examined the
Amended and Restated Certificate of Incorporation of the Company, the
By-laws of the Company, the Certificate of Designation of Rights and
Preferences of Series D Convertible Preferred Stock of ICN Pharmaceuticals,
Inc., the Registration Rights Agreement by and between SmithKline Beecham
p.l.c., the Agreement for the Sale and Purchase of a Portfolio of
Pharmaceutical, OTC and Consumer Healthcare Products and other corporate
records of the Company, and such other documents I have deemed relevant to
this opinion.
Based and relying solely upon the foregoing, it is my opinion that
when issued for a consideration of at least $.01 per Share, the Shares will
be duly authorized, validly issued, fully paid and nonassessable.
This opinion may be filed as an exhibit to the above described
Registration Statement. Consent also is given to the reference to me under
the caption "Legal Matters" in such Registration Statement as having passed
upon the validity of the issuance of the Shares. In giving this consent, I
do not hereby admit that I come within the category of persons whose
consent is required under Section 7 of the Act or the rules and regulations
of the Securities and Exchange Commission promulgated thereunder.
Respectfully submitted,
/s/ David C. Watt
-----------------------
David C. Watt
Executive Vice President,
General Counsel and Corporate
Secretary
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement
on Form S-3 of our report, which includes an emphasis of a matter paragraph
related to the Company's net monetary assets at ICN Yugoslavia, which would
be subject to foreign exchange loss if a devaluation of the Yugoslavian
dinar were to occur, dated March 5, 1998, on our audits of the consolidated
financial statements and financial statement schedule of ICN
Pharmaceuticals, Inc. We also consent to the reference to our firm under
the caption "Experts".
/s/ Coopers & Lybrand L.L.P.
Newport Beach, California
April 7, 1998
Exhibit 23.3
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the
Registration Statement on Form S-3 dated April 8, 1998 of ICN
Pharmaceuticals, Inc. of our report dated February 13, 1998, relating to
the special-purpose financial statement of F. Hoffmann-La Roche Ltd,
Hoffmann-La Roche Inc., and Roche Products Inc., which appears in the
Current Report on Form 8-K/A of ICN Pharmaceuticals, Inc. dated December 8,
1997. We also consent to the reference to us under the heading "Experts" in
such Prospectus.
/s/ PRICE WATERHOUSE LLP
- ------------------------
PRICE WATERHOUSE LLP
Morristown, New Jersey
April 8, 1998
