NEW YORK (GenomeWeb) – Great Basin Scientific today announced that it has signed a $20.5 million securities purchase agreement with institutional investors, which will provide the company with new funding for its ongoing operations.
Under the terms of the deal, the Salt Lake City-based molecular diagnostics firm will issue to the investors $22.1 million of senior convertible notes, as well as related common stock purchase warrants, equal to 16.6 percent of its issued and outstanding common stock, for gross aggregate proceeds of $18.4 million.
Each warrant will become exercisable six months after issuance and allow the holder to acquire one additional share of common stock at a price equal to 120 percent of the market price per share on the date of closing.
Great Basin said the funds will be used for product pipeline development and customer growth.
Additionally, certain Series C warrant holders participating in the transaction have agreed to exchange approximately 1.1 million of their warrants at a deemed value of $2 for $2.1 million of senior convertible notes.
According to Great Basin, the cash component of the transaction will be structured as original issue discount convertible notes. The agreement specifies that no additional interest will accrue during the duration of the notes, and the interest discount will be applied to each issuance of principal, yielding $4.6 million in gross proceeds per each tranche of the transaction.
The initial tranche is expected to close around Dec. 30.
Great Basin said it will make no payments during the first four months following each tranche, after which the notes will amortize on a straight-line basis over 12 months. The company may choose to repay the notes' principal in cash or shares of its common stock at a discount.
Great Basin has been struggling recently with a flagging stock price. In October, the Nasdaq Listings Qualifications Staff notified the firm that its shares were failing to meet certain requirements for continued listing on the exchange including a minimum $35 million market value of listed securities and a $1 minimum bid price.
Several law firms have also recently announced investigations of the company for alleged securities violations.
Earlier this month, Great Basin's stockholders approved a reverse stock split of the company's shares at a ratio of one for 50 to one for 60.
During early morning trading, shares of the company fell about 4 percent to $1.33.