Press Release Source: GTC Biotherapeutics, Inc.
GTC Signs Agreement for $15 Million Convertible Debt Financing From LFB
Monday November 3, 7:00 am ET
Financing Subject to Shareholder Approval
FRAMINGHAM, Mass.--(BUSINESS WIRE)--GTC Biotherapeutics, Inc.’s ("GTC", Nasdaq: GTCB) signed an agreement with LFB Biotechnologies, its collaboration partner for a number of recombinant plasma protein and monoclonal antibody development programs, for a $15 million financing in which GTC will issue convertible debt and warrants to purchase shares of GTCB common stock. The financing, which will be for GTC’s corporate purposes across all programs, is subject to approval by GTC shareholders, consent by GE Capital and other closing conditions. It is scheduled for a stockholder vote and closing in mid-December 2008. GTC expects net proceeds at closing, after transaction costs and establishment of a restricted cash account, to be approximately $10 million.
Under the agreement, the convertible debt will mature on June 30, 2012, and will bear interest at an annual rate of 8%. The debt may be converted into GTC common stock at $0.31 per share at LFB’s discretion at any time after June 1, 2009. GTC has the right to redeem the debt on or before June 1, 2009. GTC will also issue to LFB 5-year warrants to purchase approximately 23.2 million shares of GTCB common stock at $0.31 per share. If the debt is repaid in full, LFB will have the right to require GTC to redeem the warrants for an aggregate price of $1.5 million. As a condition of the financing, $4 million of the proceeds will be placed in a restricted cash account to secure GTC’s existing debt to GE Capital.
“Our collaborative relationship with LFB is one of GTC’s most important strategic relationships as we navigate these difficult financial markets,” stated Geoffrey F. Cox, Ph.D., GTC’s CEO and Chairman of the Board. “This financing will enable GTC to complete the significant regulatory and partnering milestones for ATryn® in the US in the first quarter of 2009. In addition, we will continue to pursue our overall strategy of developing collaborative strategic partnerships across the full range of our development pipeline.”
The convertible debt will be secured by a first lien on GTC’s intellectual property and a second lien on all of GTC’s other assets except for the restricted cash account for GE Capital. In addition, the debt will be secured by a grant of rights and licenses with respect to certain products, including GTC’s co-exclusive rights under its collaboration agreement with LFB. The convertible debt will be subordinated to the current term debt with GE Capital.
The LFB financing is subject to a vote of GTC shareholders and completion of an intercreditor agreement between LFB and GE Capital.
IMPORTANT INFORMATION
GTC intends to file a proxy statement and other relevant documents with the Securities and Exchange Commission (the "SEC") in connection with seeking the necessary shareholder approvals to complete the financing discussed above. GTC shareholders should read the proxy statement and other relevant documents when they become available because they will contain important information about the financing and the related proposals. The proxy statement, any amendments or supplements to the proxy statement, and other relevant documents filed by GTC with the SEC will be available free of charge at the SEC’s website, www.sec.gov, and at the GTC’s website, www.gtc-bio.com. Copies of these documents will also be available free of charge by submitting a written request to GTC Biotherapeutics, Inc., 175 Crossing Boulevard, Framingham, MA 01702, ATTN: Investor Relations. GTC, its directors and certain of its executive officers may be deemed participants in the solicitation of proxies from GTC’s shareholders with respect to the proposals related to the financing. Information about GTC’s directors and executive officers and their respective interests in the financing will be set forth in the proxy statement that GTC will file with the SEC in connection with seeking the necessary shareholder approvals to complete the financing. Additional information regarding GTC’s directors and executive officers is also included in GTC’s definitive proxy statement for its 2008 annual meeting, which was filed with the SEC on May 21, 2008, and is available by the means described above.
