Aceto Corp. has agreed to sell its struggling generic drugs division to an India-based drugmaker for $15 million in cash, subject to a bankruptcy auction, the Port Washington company announced Thursday night.
Aceto filed for bankruptcy protection from its creditors last month, citing mounting losses and a shortage of cash. Executives said at the time that the generic drugs unit in New Jersey, Rising Pharmaceuticals Inc., faced intense competition from rivals and had trouble delivering products.
Rising, under a “stalking horse” agreement, would be sold to Shore Suven Pharma Inc. Shore is a joint venture of Suven Life Sciences Ltd., a public company in India, and Aceto board director Vimal Kavuru, according to the announcement. The sale, which includes the assumption of some Rising liabilities, is subject to a court auction where a higher bid could be received.
The proposed $15 million sale comes eight years after Aceto purchased Rising for $80 million. It then enlarged Rising in December 2016 by purchasing some of the assets of two other drugmakers for $462 million.
Those drugmakers were run by Kavuru, who subsequently joined the Aceto board and helped to run Rising. He now will be CEO of Shore, officials said.
Aceto CEO William C. Kennally III said the proposed sale “ensures a seamless transition” for Rising customers.
Last month, he announced that Aceto will sell its chemicals division for $338 million to the private equity firm New Mountain Capital in Manhattan, subject to a future court supervised auction. The chemicals are used primarily in agriculture and manufacturing.
Both sales are expected to be completed by June 30.
In a securities filing, Aceto said its financial situation deteriorated significantly between June and December, with the amount of available cash going from $101 million to $42 million.
"While the company's operating businesses continue to generate cash ... substantial doubt is deemed to exist about the company's ability to continue as a going concern," Aceto said in the filing last month.
As part of the bankruptcy filings and proposed sales, the company has secured $60 million in financing to keep operating and to pay its workforce of 315 people.
Thursday’s announcement comes 10 months after Aceto said it would explore the sale of the entire company or some of its divisions because of falling prices for some of its generic drugs.
Aceto shares slipped 4 cents to close at 15 cents Friday on the Nasdaq stock market. The shares face delisting by the Nasdaq.