On October 1, 2012, Elan announced the election to redeem all of the 2016 Fixed Rate Notes, not purchased in the Tender Offer (the Redemption Offer). The total consideration for the Redemption Offer was $1,087.50 per $1,000 principal amount of 2016 Fixed Rate Notes, plus accrued and unpaid interest to the date of payment. The Redemption Offer is expected to close on October 31, 2012.

Following the completion of the issuance of the 2019 Fixed Rate Notes and the Tender Offer, along with the expected completion of the Redemption Offer on October 31, 2012 of the remaining $43.7 million in aggregate principal amount of 2016 Fixed Rate Notes, the principal amount of Elan’s debt has been reduced from $624.5 million at September 30, 2012 to $600.0 million on a pro forma basis. As a consequence of the Tender Offer and the Redemption Offer, Elan will record a net charge on debt retirement of approximately $76 million in the fourth quarter of 2012 (including a non-cash write-off of approximately $18 million related to unamortized deferred financing costs).

Net loss on equity method investments

The losses on equity method investments for the three and nine months ended September 30, 2012 and 2011 can be analyzed as follows:
Three Months Ended     Nine Months Ended
September 30 September 30
2011   2012 2011   2012
US$m   US$m       US$m   US$m
11.2 27.7 Janssen AI 62.4 76.0
117.3 Impairment of Janssen AI 117.3
1.1 0.8 Proteostasis 1.5 2.7
Alkermes plc 7.2
12.3 145.8 Total 63.9 203.2
 

Janssen AI

As part of Elan’s 2009 transaction with Johnson & Johnson, Janssen AI, a subsidiary of Johnson & Johnson, acquired substantially all of Elan’s assets and rights related to its Alzheimer’s Immunotherapy Program (AIP) collaboration with Wyeth (which has been acquired by Pfizer). Under the terms of this transaction, Johnson & Johnson provided an initial $500.0 million funding to Janssen AI and Elan has a 49.9% shareholding in Janssen AI. Any additional funding in excess of the initial $500.0 million funding commitment is required to be funded equally by Elan and Johnson & Johnson up to a maximum additional commitment of $400.0 million in total.

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