NEW YORK (GenomeWeb News) – Helicos BioSciences has received an initial bridge loan today of $333,333 from two funds affiliated with venture capital firms as part of an agreement which could provide the firm a total of $4 million in bridge financing.
The cash-strapped firm, which was delisted from Nasdaq earlier this week, entered into a secured note purchasing agreement with investment funds affiliated with Atlas Venture and Flagship Ventures, both of which are previous investors in Helicos. According to a filing with the US Securities and Exchange Commission, the firm has agreed to sell to those purchasers an aggregate of $4 million of convertible promissory notes, a portion of which is committed and a portion of which is optional.
In addition to the initial $333,333 infusion of cash, the funds are committed to purchasing an aggregate of an additional $333,333 of notes in each of five subsequent closings, for a total aggregate committed amount of $2 million. The purchasers also have the right, but not the obligation, to purchase up to an additional $2 million of notes on or before Dec. 31, 2012, at Helicos' request.
The notes have an interest rate of 10 percent per annum. The outstanding principal and any unpaid accrued interest on all of the notes are due and payable in full upon demand by the funds no earlier than Dec. 31, 2012, or upon Helicos receiving at least $10 million in proceeds from a subsequent equity financing, upon a change of control of the company, or upon an event of default.
Helicos concurrently entered into a risk payment agreement with the notes purchasers tied to potential liquidity transactions.
In addition, it reached an agreement with GE and other lenders to waive various existing events of default and amended warrants previously issued to the lenders, repricing those warrants from $4.80 to $0.01. GE and the lenders also agreed to defer a $200,000 payment due January 31, 2011 to the term loan maturity date.
According to the filing Helicos entered into the agreements because it entered the fourth quarter of 2010 "without any prospects of securing long-term financing from outside investors." It added that an Independent Committee of the Board evaluated alternatives available to the firm and "determined that a bridge financing lead by certain inside investors was in the best interests of the company's stakeholders in view of the company's current financial and operating condition, and would best position the company to continue operations for the remainder of 2010 and into 2011."
Helicos undertook a restructuring earlier this year, which included cutting its workforce by more than half.
In a separate SEC filing today, the firm reported that its third-quarter revenues declined 43 percent year over year. Helicos also reported that as of Nov. 10, it held only $1.8 million in cash and cash equivalents.