Almirall to refinance U.S. medical dermatology acquisition

Barcelona, 4th December 2018

Today, Almirall, S.A. announces the launch of a €250 MM offering of senior unsecured bonds due 2021 (the "Bonds"), which may be re-designated as senior unsecured bonds convertible into or exchangeable for ordinary shares of the company subject to the approval of the general shareholders' meeting. The Gallardo family is expected to vote in favour of such re-designation at the meeting.

The company intends to execute this bond financing together with an equity neutral strategy in order to minimize potential dilution of current shareholders. The company has the intention to accelerate the building of its treasury stock position.

After the closing of the bonds' offering, the company intends to seek admission to trading for the Bonds on the Frankfurt Stock Exchange. JP Morgan is acting as Sole Bookrunner in relation to the offering of the Bonds.

The company intends to use the net proceeds from the offering, together with the proceeds from a new €150 MM (bullet 5 years) senior unsecured Club Bank Deal syndicated loan led by BBVA, to repay in full its €400 MM bridge loan raised in September 2018 for the acquisition of Allergan's Medical Dermatology business in the United States.

Upon completion of this refinancing, Almirall estimates that its effective financing costs (including bank fees) would be around 1.3% per annum and would allow for rapid balance sheet deleveraging, while further optimizing its cost of capital (WACC).

Almirall S.A. is rated BB- (Outlook Stable) by S&P and Ba3 (Outlook Stable) by Moody's. The Bonds will be rated BB- by S&P.

"Almirall is securing very favourable refinancing conditions for its U.S. acquisition which reflects the underlying strength of the company as well as the market confidence in Almirall's ability to generate strong operating cash flow. This enables us to establish beneficial terms and to free up funding to support the launches of our psoriasis franchise in Europe and of our acne franchise in the US", explained David Nieto, Executive Vice President & Chief Financial Officer, Almirall. "We continue to strengthen the position of Almirall in the market".

More information about the proposed terms of the Bonds

The Bonds will bear a fixed coupon of between 0.00% - 0.50% per annum payable semi-annually in arrear and will be issued at 100% of their principal amount.

The Bonds will mature on the third anniversary of the Closing Date (the "Maturity Date"). Any Bonds outstanding on the Maturity Date will be redeemed at 100% of their principal amount. Almirall, S.A. (the "Company") may, provided that the Convertibility Conditions have been satisfied by the Re-designation Date (both as defined below), redeem all, but not some only of the Bonds, at their principal amount plus accrued and unpaid interest if at any time on or after the 2^nd anniversary and 21 days from the Closing Date the aggregate market value of the underlying shares per Bond in the principal amount of €100,000 per Bond, during a specified period of time, exceeds €125,000 or if at any time less than 15% of the aggregate principal amount of the Bonds issued remains outstanding.

The re-designation of the Bonds will be conditional upon the shareholders' approval at a General Meeting (the "General Meeting"), to be held not later than 30 June 2019, of the increase in share capital of the Company and disapplication of preferential subscription rights to re-designate the Bonds as senior unsecured convertible bonds and to enable the issue of shares on conversion of the Bonds pursuant to Spanish company law requirements (the "Shareholders' Resolutions"), the registration with the Mercantile Registry of the public deed notarising the Shareholders' Resolutions and amending the public deed of issue (the "Convertibility Conditions") and notification thereof specifying the re-designation date (the "Re-designation Date") having been given to Bondholders within the timeframe specified in the terms and conditions. The Gallardo family, through Grupo Plafin, S.A.U. and Grupo Corporativo Landon, S.L., together holding 66.297% of the share capital of Almirall (the "Gallardo Family"), is expected to vote in favour of such re-designation at the General Meeting.

Following the Re-designation Date and subject to the Convertibility Conditions having been satisfied, unless previously redeemed or purchased and cancelled, the Bonds will become convertible at the option of Bondholders at an initial conversion price which will be calculated by adding the reference price of a share (determined as the Volume Weighted Average Price ("VWAP") of the ordinary shares of the company on the Spanish Exchanges during the period between opening and closing of trading today) and a premium above the VWAP (which is expected to range between 25% and 30% above the VWAP of a share as referred to above and will be set following pricing later today). The initial conversion price will be subject to customary anti-dilution adjustments pursuant to the terms and conditions of the Bonds. When Bondholders exercise their conversion rights, the Company will deliver newly issued and/or existing shares (as decided by the Company).

If the Shareholders' Resolutions are proposed but not passed by a General Meeting prior to 30 June 2019 or the Shareholders' Resolutions are proposed and passed at a General Meeting prior to 30 June 2019 but the rest of the Convertibility Conditions are not satisfied within the time frame specified in the terms and conditions, the Company may, at any time after its conclusion and in accordance with the terms and conditions by giving notice to the Bondholders, elect to redeem all but not some only of the Bonds, at the greater of (i) 102% of the principal amount of the Bonds, together with accrued interest, and (ii) 102% of the fair bond value of the Bonds, together with accrued interest.

Moreover, if a notice of re-designation has not been given to Bondholders within the time frame specified in the terms and conditions and provided that the Issuer has not otherwise given notice to redeem the Bonds pursuant to the paragraph above, a Bondholder may on giving notice require the redemption of its Bonds at the greater of (i) 102% of the principal amount of such Bonds, together with accrued interest and (ii) 102% of the fair bond value of such Bonds, together with accrued interest.

Additionally, at any time, a Bondholder may, on giving notice within a specified period, require the redemption of its Bonds at their principal amount, together with accrued interest, in the event of a change of control or reduction of the free float of the Company below a certain threshold and, if any of these situations has occurred before the Re-designation Date, at the greater of the principal amount of such Bonds, together with accrued interest and the fair bond value of such Bonds, together with accrued interest.

The final terms and conditions of the Bonds are expected to be set today, upon the conclusion of an accelerated bookbuilding process to be carried out by J.P. Morgan as Sole Global Coordinator and Sole Bookrunner (the "Sole Bookrunner"). In connection with the offering, the Company is expected to enter into a subscription agreement with the Sole Bookrunner (the "Subscription Agreement"), governed by English law. The subscription and settlement of the Bonds are expected to take place on or around 14^th of December 2018 (the "Closing Date"), provided that the conditions precedent set out in the Subscription Agreement are satisfied.

In the context of the offering of the Bonds, the Company and its subsidiaries are subject to a lock-up undertaking in relation to their shares for a period commencing on the date hereof and ending 90 calendar days after the Closing Date, subject to customary exceptions. The Gallardo Family will also be subject to a lock-up undertaking in relation to their shares from the date hereof until the earlier of (i) 30 June 2019, or (ii) the Re-designation Date, subject to a minimum lock-up period of 90 calendar days after the Closing Date, (subject to customary exceptions).

The Bonds will be offered and sold only to institutional investors outside of the United States, Canada, Australia, South Africa and Japan. No public offering of the Bonds will be made.

About Almirall

Almirall is a leading skin-health focused global pharmaceutical company that partners with healthcare professionals, applying Science to provide medical solutions to patients and future generations. Our efforts are focused on fighting against skin health diseases and helping people feel and look their best. We support healthcare professionals by continuous improvement, bringing our innovative solutions where they are needed.

The company, founded almost 75 years ago with headquarters in Barcelona, is listed on the Spanish Stock Exchanges (ticker: ALM). Almirall has been key in value creation to society through its commitment to major shareholders and its decision to help others, to understand their challenges and to use Science to provide solutions for real life. Total revenues in 2017 were 755.8 million euros. More than 1,830 employees are devoted to Science.

For more information, please visit almirall.com    linkedin.com/company/almirall

IMPORTANT NOTE NO ACTION HAS BEEN TAKEN BY THE ISSUER, THE SOLE BOOKRUNNER OR ANY OF THEIR RESPECTIVE AFFILIATES THAT WOULD PERMIT AN OFFERING OF THE BONDS OR POSSESSION OR DISTRIBUTION OF THIS PRESS RELEASE OR ANY OFFERING OR PUBLICITY MATERIAL RELATING TO THE BONDS IN ANY JURISDICTION WHERE ACTION FOR THAT PURPOSE IS REQUIRED. PERSONS INTO WHOSE POSSESSION THIS PRESS RELEASE COMES ARE REQUIRED BY THE ISSUER AND THE SOLE BOOKRUNNER TO INFORM THEMSELVES ABOUT, AND TO OBSERVE, ANY SUCH RESTRICTIONS.

THIS PRESS RELEASE IS NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY IN OR INTO THE UNITED STATES. THIS PRESS RELEASE IS NOT AN OFFER TO SELL SECURITIES OR THE SOLICITATION OF ANY OFFER TO BUY SECURITIES, NOR SHALL THERE BE ANY OFFER OF SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SALE WOULD BE UNLAWFUL.

THIS PRESS RELEASE AND THE OFFERING WHEN MADE ARE ONLY ADDRESSED TO, AND DIRECTED IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA (THE "EEA") AT PERSONS WHO ARE "QUALIFIED INVESTORS" WITHIN THE MEANING OF ARTICLE 2(1)(E) OF THE PROSPECTUS DIRECTIVE ("QUALIFIED INVESTORS"). FOR THESE PURPOSES, THE EXPRESSION "PROSPECTUS DIRECTIVE" MEANS DIRECTIVE 2003/71/EC, AS AMENDED.

SOLELY FOR THE PURPOSES OF THE PRODUCT GOVERNANCE REQUIREMENTS CONTAINED WITHIN: (A) EU DIRECTIVE 2014/65/EU ON MARKETS IN FINANCIAL INSTRUMENTS, AS AMENDED ("MIFID II"); (B) ARTICLES 9 AND 10 OF COMMISSION DELEGATED DIRECTIVE (EU) 2017/593 SUPPLEMENTING MIFID II; AND (C) LOCAL IMPLEMENTING MEASURES (TOGETHER, THE "MIFID II PRODUCT GOVERNANCE REQUIREMENTS"), AND DISCLAIMING ALL AND ANY LIABILITY, WHETHER ARISING IN TORT, CONTRACT OR OTHERWISE, WHICH ANY "MANUFACTURER" (FOR THE PURPOSES OF THE MIFID II PRODUCT GOVERNANCE REQUIREMENTS) MAY OTHERWISE HAVE WITH RESPECT THERETO, THE BONDS HAVE BEEN SUBJECT TO A PRODUCT APPROVAL PROCESS, WHICH HAS DETERMINED THAT: (I) THE TARGET MARKET FOR THE BONDS IS ELIGIBLE COUNTERPARTIES AND PROFESSIONAL CLIENTS ONLY, EACH AS DEFINED IN MIFID II; AND (II) ALL CHANNELS FOR DISTRIBUTION OF THE BONDS TO ELIGIBLE COUNTERPARTIES AND PROFESSIONAL CLIENTS ARE APPROPRIATE. ANY PERSON SUBSEQUENTLY OFFERING, SELLING OR RECOMMENDING THE BONDS (A "DISTRIBUTOR") SHOULD TAKE INTO CONSIDERATION THE MANUFACTURER'S TARGET MARKET ASSESSMENT; HOWEVER, A DISTRIBUTOR SUBJECT TO MIFID II IS RESPONSIBLE FOR UNDERTAKING ITS OWN TARGET MARKET ASSESSMENT IN RESPECT OF THE BONDS (BY EITHER ADOPTING OR REFINING THE MANUFACTURER'S TARGET MARKET ASSESSMENT) AND DETERMINING APPROPRIATE DISTRIBUTION CHANNELS.

THE TARGET MARKET ASSESSMENT IS WITHOUT PREJUDICE TO THE REQUIREMENTS OF ANY CONTRACTUAL OR LEGAL SELLING RESTRICTIONS IN RELATION TO ANY OFFERING OF THE BONDS.

FOR THE AVOIDANCE OF DOUBT, THE TARGET MARKET ASSESSMENT DOES NOT CONSTITUTE: (A) AN ASSESSMENT OF SUITABILITY OR APPROPRIATENESS FOR THE PURPOSES OF MIFID II; OR (B) A RECOMMENDATION TO ANY INVESTOR OR GROUP OF INVESTORS TO INVEST IN, OR PURCHASE, OR TAKE ANY OTHER ACTION WHATSOEVER WITH RESPECT TO THE BONDS.

THE BONDS ARE NOT INTENDED TO BE OFFERED, SOLD OR OTHERWISE MADE AVAILABLE TO AND SHOULD NOT BE OFFERED, SOLD OR OTHERWISE MADE AVAILABLE TO ANY RETAIL INVESTOR IN THE EEA. FOR THESE PURPOSES, A RETAIL INVESTOR MEANS A PERSON WHO IS ONE (OR MORE) OF: (I) A RETAIL CLIENT AS DEFINED IN POINT (11) OF ARTICLE 4(1) OF MIFID II; OR (II) A CUSTOMER WITHIN THE MEANING OF DIRECTIVE 2002/92/EC, WHERE THAT CUSTOMER WOULD NOT QUALIFY AS A PROFESSIONAL CLIENT AS DEFINED IN POINT (10) OF ARTICLE 4(1) OF MIFID II. CONSEQUENTLY, NO KEY INFORMATION DOCUMENT REQUIRED BY REGULATION (EU) NO 1286/2014, AS AMENDED (THE "PRIIPS REGULATION") FOR OFFERING OR SELLING THE BONDS OR OTHERWISE MAKING THEM AVAILABLE TO RETAIL INVESTORS IN THE EEA HAS BEEN PREPARED AND THEREFORE OFFERING OR SELLING THE BONDS OR OTHERWISE MAKING THEM AVAILABLE TO ANY RETAIL INVESTOR IN THE EEA MAY BE UNLAWFUL UNDER THE PRIIPS REGULATION.

IN ADDITION, IN THE UNITED KINGDOM THIS PRESS RELEASE IS BEING DISTRIBUTED ONLY TO, AND IS DIRECTED ONLY AT, QUALIFIED INVESTORS (I) WHO HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS FALLING WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AS AMENDED (THE "ORDER") AND QUALIFIED INVESTORS FALLING WITHIN ARTICLE 49(2)(A) TO (D) OF THE ORDER, AND (II) TO WHOM IT MAY OTHERWISE LAWFULLY BE COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS"). THIS PRESS RELEASE MUST NOT BE ACTED ON OR RELIED ON (I) IN THE UNITED KINGDOM, BY PERSONS WHO ARE NOT RELEVANT PERSONS, AND (II) IN ANY MEMBER STATE OF THE EEA OTHER THAN THE UNITED KINGDOM, BY PERSONS WHO ARE NOT QUALIFIED INVESTORS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS PRESS RELEASE RELATES IS AVAILABLE ONLY TO (A) RELEVANT PERSONS IN THE UNITED KINGDOM AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS IN THE UNITED KINGDOM AND (B) QUALIFIED INVESTORS IN MEMBER STATES OF THE EEA (OTHER THAN THE UNITED KINGDOM).

ANY DECISION TO PURCHASE ANY OF THE BONDS SHOULD ONLY BE MADE ON THE BASIS OF AN INDEPENDENT REVIEW BY A PROSPECTIVE INVESTOR OF THE ISSUER'S PUBLICLY AVAILABLE INFORMATION. NEITHER THE SOLE BOOKRUNNER NOR ANY OF ITS AFFILIATES ACCEPT ANY LIABILITY ARISING FROM THE USE OF, OR MAKE ANY REPRESENTATION AS TO THE ACCURACY OR COMPLETENESS OF, THIS PRESS RELEASE OR THE ISSUER'S PUBLICLY AVAILABLE INFORMATION. THE INFORMATION CONTAINED IN THIS PRESS RELEASE IS SUBJECT TO CHANGE IN ITS ENTIRETY WITHOUT NOTICE UP TO THE CLOSING DATE.

EACH PROSPECTIVE INVESTOR SHOULD PROCEED ON THE ASSUMPTION THAT IT MUST BEAR THE ECONOMIC RISK OF AN INVESTMENT IN THE BONDS OR THE ORDINARY SHARES TO BE ISSUED OR TRANSFERRED AND DELIVERED UPON CONVERSION OF THE BONDS AND NOTIONALLY UNDERLYING THE BONDS (TOGETHER WITH THE BONDS, THE "SECURITIES"). NEITHER THE ISSUER NOR THE SOLE BOOKRUNNER MAKES ANY REPRESENTATION AS TO (I) THE SUITABILITY OF THE SECURITIES FOR ANY PARTICULAR INVESTOR, (II) THE APPROPRIATE ACCOUNTING TREATMENT AND POTENTIAL TAX CONSEQUENCES OF INVESTING IN THE SECURITIES OR (III) THE FUTURE PERFORMANCE OF THE SECURITIES EITHER IN ABSOLUTE TERMS OR RELATIVE TO COMPETING INVESTMENTS. THE SOLE BOOKRUNNER IS ACTING ON BEHALF OF THE ISSUER AND NO ONE ELSE IN CONNECTION WITH THE BONDS AND WILL NOT BE RESPONSIBLE TO ANY OTHER PERSON FOR PROVIDING THE PROTECTIONS AFFORDED TO CLIENTS OF THE SOLE BOOKRUNNER OR FOR PROVIDING ADVICE IN RELATION TO THE SECURITIES.

EACH OF THE ISSUER, THE SOLE BOOKRUNNER AND THEIR RESPECTIVE AFFILIATES EXPRESSLY DISCLAIMS ANY OBLIGATION OR UNDERTAKING TO UPDATE, REVIEW OR REVISE ANY STATEMENT CONTAINED IN THIS PRESS RELEASE WHETHER AS A RESULT OF NEW INFORMATION, FUTURE DEVELOPMENTS OR OTHERWISE.