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RENNOVA HEALTH, INC. ANNOUNCES APPROXIMATELY $19.3 MILLION OF A REDUCTION IN SECURED DEBENTURES
WEST PALM BEACH, Fla., Sept. 02, 2020 (GLOBE NEWSWIRE) -- Rennova Health, Inc. (OTC: RNVA) (OTC: RNVAW), today announced that on August 31, 2020, the Company completed agreements with certain institutional investors to reduce their holdings of the Company's secured debentures by approximately $19.3 million by exchanging the debentures for shares of the Company's newly-authorized Series N Convertible Redeemable Preferred Stock (the "Series N Preferred Stock"). The investors continue to own approximately $14.9 million of secured debentures, but have agreed that the Company could redeem $10 million of its obligations under these debentures within 90 days at which time the outstanding balance will also be exchanged to the Company's Series N Preferred Stock. The investors exchanged approximately $19.3 million of debentures and all of the outstanding shares of the Company's Series I-1 Convertible Preferred Stock and Series I-2 Convertible Preferred Stock for 30,435 shares of the Company's newly-authorized Series N Convertible Redeemable Preferred Stock. This transaction combined with the previously disclosed exchange of approximately $18.8 million of debt to Preferred Stock by a previous Director of the Company on June 30(th) reduces debt on the Company's balance sheet by approximately $38 million. "This reduction of secured debt is a significant step in the final phase of our restructure". said Seamus Lagan, CEO of Rennova Health, "After our recent reverse split the improvement in our balance sheet and reduction of ongoing penalties and charges as a result of this transaction will create a much clearer picture for our shareholders and investors and should facilitate access to additional capital as may be required to improve and expand the Company's' business strategy. We look forward to providing additional updates of progress of our business strategy, including the separation of our software division in the coming days". The Company has 1,277,429 shares of common stock outstanding as of close of business on September 1, 2020. About Rennova Health, Inc. Rennova operates three rural hospitals and a physician's office in Tennessee and a rural clinic in Kentucky, and provides industry-leading diagnostics and supportive software solutions to healthcare providers. Through an ever-expanding group of strategic brands that work in unison to empower customers, we are creating the next generation of healthcare. For more information, please visit www.rennovahealth.com Forward-Looking Statements This press release includes "forward-looking statements" within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Actual results may differ from expectations and, consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as "expect," "estimate," "project," "budget," "forecast," "anticipate," "intend," "plan," "may," "will," "could," "should," "believes," "predicts," "potential," "continue," and similar expressions are intended to identify such forward-looking statements. These forward-looking statements involve significant risks and uncertainties that could cause the actual results to differ materially from the expected results. Additional information concerning these and other risk factors are contained in the Company's most recent filings with the Securities and Exchange Commission. The Company cautions readers not to place undue reliance upon any forward-looking statements, which speak only as of the date made. The Company does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in their expectations or any change in events, conditions or circumstances on which any such statement is based, except as required by law. Contacts: Rennova Health Sebastien Sainsbury 561-666-9818 ssainsbury@rennovahealth.com # # # (END) Dow Jones Newswires September 02, 2020 08:33 ET (12:33 GMT) Story ID: 20200902SN006249 Keywords: COMPANY NEWS, HEALTH CARE, DOW JONES CONTENT SET SN, PRESS RELEASE WIRES, GRAND CENTRAL ASSET CLASS EQUITIES, GLOBENEWSWIRE, SIGNIFICANT STORY, HEALTH CARE PROVIDERS Symbols: RNVA, RNVAW
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Item 1.01. Entry into a Material Definitive Agreement.
On August 31, 2020, Rennova Health, Inc. (the “Company”) entered into Exchange, Redemption and Forbearance Agreements (the “Agreements”) with certain institutional investors in the Company. In the Agreements, the investors agreed to reduce their holdings of the Company’s debentures by approximately $19.3 million (including accrued interest and penalties) by exchanging the debentures and all of the outstanding shares of the Company’s Series I-1 Convertible Preferred Stock and Series I-2 Convertible Preferred Stock for 30,435 shares of the Company’s newly-authorized Series N Convertible Redeemable Preferred Stock (the “Series N Preferred Stock”). The terms of the Series N Preferred Stock are set forth below. Christopher Diamantis, a former director of the Company, is also a party to the Agreements as he continues to be a guarantor of a portion of the remaining debt.
The investors will continue to own, after the initial exchange, approximately $14.9 million (including accrued interest and penalties) of debentures, but have agreed that the Company could redeem $10 million of its obligations under these debentures held by the investors at face value, plus accrued interest and penalties. These debentures include approximately $5.0 million under debentures that have been guaranteed by Mr. Diamantis. This redemption right is exercisable for 90 days. If it is exercised in full, the remaining debentures held by the investors (totaling approximately $4.9 million, including accrued interest and penalties) will be exchanged for approximately 4,900 additional shares of Series N Preferred Stock.
During the 90-day redemption period (or until the occurrence of certain specified events, if earlier), the investors will forbear from exercising any remedies against the Company or Mr. Diamantis as a result of any existing defaults under the outstanding securities. During that period, additional interest and penalties will not accrue and will be forgiven if the redemption right is exercised in full. If the redemption right is not exercised in full, all such additional amounts will become due and payable.
The shares of Series N Preferred Stock were issued in reliance on the exemption from registration contained in Section 3(a)(9) of the Securities Act of 1933, as amended.
The foregoing description of the Agreements does not purport to be complete and is qualified by reference to the Agreements, a form of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 3.02. Unregistered Sales of Equity Securities.
The information set forth in Item 1.01 is incorporated herein by reference.
Item 3.03. Material Modification to Rights of Security Holders.
The information set forth in Item 1.01 is incorporated herein by reference.
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Changes in Fiscal Year.
On August 31, 2020, the Company filed a Certificate of Designation with the Secretary of State of the State of Delaware to authorize the issuance of up to 50,000 shares of Series N Preferred Stock. The following is a summary of certain terms of the Series N Preferred Stock.
General. The Company’s Board of Directors has designated 50,000 shares of the 5,000,000 authorized shares of preferred stock as the Series N Preferred Stock. Each share of the Series N Preferred Stock has a stated value of $1,000.
Voting Rights. Except as provided below or by law, the Series N Preferred Stock shall have no voting rights. However, as long as any shares of Series N Preferred Stock are outstanding, the Company shall not, without the affirmative vote of the holders of a majority of the then outstanding shares of the Series N Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to the Series N Preferred Stock or alter or amend the Certificate of Designation, (b) amend its certificate of incorporation or other charter documents in any manner that adversely affects any rights of the holders, (c) increase the number of authorized shares of the Series N Preferred Stock, or (d) enter into any agreement with respect to any of the foregoing.
Dividends. Dividends at the rate per annum of 10% of the stated value per share shall accrue on each outstanding share of Series N Preferred Stock from and after the date of the original issuance of such share of Series N Preferred Stock (the “Preferred Accruing Dividends”). The Preferred Accruing Dividends shall accrue from day to day, whether or not declared, and shall be cumulative and non-compounding; provided, however, that such Preferred Accruing Dividends shall be payable only when, as, and if declared by the Board of Directors. No cash dividends shall be paid on the common stock unless the Preferred Accruing Dividends are paid.
Rank. The Series N Preferred Stock ranks with respect to dividends or a liquidation, (i) on parity with the common stock, the Company’s Series H Convertible Preferred Stock, the Company’s Series L Convertible Preferred Stock and the Company’s Series M Convertible Preferred Stock, (ii) senior to the Company’s Series F Convertible Preferred Stock, and (iii) junior to any other class or series of preferred stock of the Company afterwards created and ranking by its terms senior to the Preferred Stock.
Conversion. Each share of the Series N Preferred Stock is convertible into shares of the Company’s common stock, at any time and from time to time, at the option of the holder, into that number of shares of common stock determined by dividing the stated value of such share of Series N Preferred Stock, plus any accrued declared and unpaid dividends, by the conversion price. The conversion price is equal to 90% of the lowest VWAP during the 10 trading days immediately prior to the conversion date. Holders of the Series N Preferred Stock are prohibited from converting Series N Preferred Stock into shares of common stock if, as a result of such conversion, the holder, together with its affiliates, would own more than 4.99% (or, upon election of the holder, 9.99%) of the total number of shares of common stock then issued and outstanding. However, any holder may increase or decrease such percentage to any other percentage not in excess of 9.99%, provided that any increase in such percentage shall not be effective until 61 days after notice to the Company.
Liquidation Preference. Upon any liquidation, dissolution or winding up of the Company, the holders of the Series N Preferred Stock shall be entitled to receive an amount equal to the stated value of the Series N Preferred Stock, plus any accrued declared and unpaid dividends thereon and any other fees or liquidated damages then due and owing thereon, for each share of the Series N Preferred Stock before any distribution or payment shall be made on any junior securities.
Redemption. At any time the Company shall have the right to redeem all, or any part, of the Series N Preferred Stock then outstanding. The Series N Preferred Stock subject to redemption shall be redeemed by the Company in cash in an amount equal to the stated value of the shares of the Series N Preferred Stock being redeemed plus all accrued declared and unpaid dividends.
The foregoing description of the Series N Preferred Stock does not purport to be complete and is qualified by reference to the Certificate of Designation of the Series N Preferred Stock, a copy of which is filed as Exhibit 3.25 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. Exhibit Description
3.25 Certificate of Designation for Series N Convertible Redeemable Preferred Stock. 10.1 Form of Exchange, Redemption and Forbearance Agreement, dated as of August 31, 2020, among Rennova Health, Inc., Christopher Diamantis and the investor signatory thereto
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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