(Adds analyst and company comments, updates shares)
By Manojna Maddipatla
Sept 10 (Reuters) - Mallinckrodt Plc shares surged more than 50% on Tuesday after it agreed to sell its contract manufacturing unit to reduce debt and its chief executive officer raised hopes that the company could reach a global settlement to resolve all opioid litigation.
The drugmaker is among opioid manufacturers that are facing thousands of lawsuits seeking to hold them responsible for fueling an addiction crisis in the United States.
Investors have worried about Mallinckrodt's large debt pile and potential payouts needed to resolve the litigation.
Last week, the company agreed to pay cash of $24 million to two Ohio counties, to fully resolve certain opioid-related lawsuits and to avoid going to trial in October.
"We actually think we now may have a pathway to settle this, and that's what we're going to be working on for the next several months," Chief Executive Officer Mark Trudeau said at a conference on Tuesday.
"The settlement (of last week) really enables us to have the appropriate time to get into discussions on what we believe is likely or potentially a pathway to settle this globally and with finality."
Mallinckrodt said it intends to use proceeds from the sale of its unit BioVectra Inc to private equity firm H.I.G. Capital for up to $250 million in a manner consistent with its "previously disclosed capital allocation priorities."
That primarily means paying off debt, which stood at over $5 billion, as of June 28.
Analysts view the sale, which would bring in an upfront payment of $135 million for Mallinckrodt, as a positive as it helps support near-term financial obligations.
"This is partly reactionary given the (opioid) litigation that's heated up and the fact that they have $700 million of debt that's coming due in April of next year," Gary Nachman of BMO Capital Markets said.
The company has downplayed bankruptcy concerns and unveiled a strategy to separate its generics unit, which sells opioid drugs, from its specialty business, which sells branded drugs.
However, in August it suspended these plans, citing uncertainties tied to opioid litigation and market conditions.
Tuesday's deal advances Mallinckrodt's focus on branded, high-growth biopharmaceuticals by monetizing a non-core business, Trudeau said.
However, SVB Leerink analyst Ami Fadia said one could question the amount of value management was able to get for the asset, considering its investment.
"This has clearly taken a back seat to near-term cash needs."
Up to Monday's close, Mallinckrodt shares have plunged nearly 87% this year. (Reporting by Manojna Maddipatla and Tamara Mathias in Bengaluru; Editing by Shinjini Ganguli and Shailesh Kuber)