NEW YORK (GenomeWeb) – Interpace Diagnostics today announced an agreement with an unnamed institutional investor to restructure its secured debt with former shareholders of RedPath, and to terminate its royalty and milestone obligations.
Under the terms of the deal, the investor will buy $9.34 million of Interpace's outstanding secured debt to RedPath for $8.9 million. The investor has agreed to exchange the debt for a $5.32 million secured convertible note with a fixed conversion price of $2.44 and a secured note of about $3.55 million issued by Interpace. The new notes will bear nominal interest at the Federal interest rate and, with interest, mature on June 22, 2018 at 125 percent of face value, if they are not previously converted into common stock.
Interpace will also issue to RedPath five-year warrants to buy an aggregate of 100,000 shares of its common stock at $4.69 per share. RedPath will terminate all future royalty and milestone obligations resulting from Interpace's acquisition of the firm. The deal was expected to close on or about today.
Interpace's then-parent firm PDI acquired RedPath in late 2014 for $23 million in cash and stock.
Interpace had been seeking to restructure its debt obligations related to a $10.7 million secured note payable to former equity holders of RedPath.
"The objective of this restructuring is to reduce our principal obligation, initially by approximately $460,000, eliminate our quarterly repayment obligations in 2017 by approximately $4 million, eliminate future royalty and milestone obligations that will result in an immediate positive impact on our balance sheet of approximately $6 million, and provide an opportunity to completely eliminate all liens and security interests in our assets with either the conversion or redemption of 55 percent of each of the new notes," Interpace President and CEO Jack Stover said in a statement.
"With this restructuring, we will have a cleaner, stronger balance sheet," he added.
Maxim Group acted as the sole agent for the transaction.
In early morning trading on the Nasdaq on Thursday, Interpace's shares were down about 13 percent at $2.50.