Saturday, December 29, 2018 1:46:00 PM
An Overview of our Debt Refinancing
Dear Friends,
Eighteen months ago we raised $5 million in debt financing by issuing 15% senior secured notes to Scopia Holdings LLC to fund our ongoing operations. As stipulated in the note, we have been paying half of the interest in cash every six months and the rest has accrued. The note, including principal and accrued interest, were due to be paid in full in approximately six months.
As we have disclosed in previous updates, we have been working diligently over the past few months to refinance this debt well in advance of its maturity as we enter a year marked by important commercial and regulatory milestones.
We are pleased to announce that yesterday, we completed this refinancing of our senior secured debt with a single institutional investor. For full details please CLICK HERE or on the above image to review the related Form 8-K filed with the SEC yesterday.
The refinancing of our senior secured debt, well ahead of its maturity date, further strengthens our balance sheet through key value-inflection milestones in 2019. In addition to removing the July 2019 debt maturity overhang, it increases our working capital by approximately $1.45 million and does so under terms favorable to our company including a lower coupon rate and no attached warrants.
We issued $7.75 million of two-year 7.875% convertible senior secured notes to an institutional investor which yielded net cash proceeds of approximately $6.45 million after deducting the original issue discount and transaction fees. We used $5 million of the net cash proceeds to repay the outstanding principal of the 15% senior secured notes held by Scopia Holdings. In addition, Scopia Holdings agreed to accept 600,000 shares of our common stock at a price of approximately $1.30/share (a premium of over 41% to yesterday’s closing price) for payment of all due and accrued interest. We intend to use the $1.45 million in net proceeds as additional working capital to advance our lead products towards commercialization.
The new notes are convertible at $1.60, reflecting a premium of over 74% to yesterday’s closing price. They include an interest-only period with the first of 37 bi-monthly installment payments due on June 28, 2019 and a maturity date of December 31, 2020. We have the option to make installment payments in cash or by issuing shares of common stock valued at a modest discount to the volume-weighted average price (VWAP) of our stock at the time of payment. To reiterate, payment in cash or stock is fundamentally at PAVmed’s discretion. The detailed terms of the note are provided in the Form 8-K and accompanying exhibits, including customary covenants, equity and capital market conditions as well as the opportunity to accelerate payments under certain mutually beneficial conditions.
We are very happy to enter what promises to be an exciting 2019 with our fiscal house in order and a strong, stable balance sheet to support our drive toward commercialization of our lead products.
As always, please free to contact me with any questions.
Happy Holidays!
J. Michael Havrilla
Director, Investor Relations
PAVmed Inc. | NASDAQ PAVM
M 814-241-4138
E JMH@PAVmed.com
One Grand Central Place
60 E. 42nd Street | Suite 4600
New York, NY 10165
www.PAVmed.com
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