Renalytix plc
For the period ended Sep 26, 2024. Filed Oct 1, 2024.
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A notice of a major event between regular reports, such as results, a deal or a change of executives. It is often the first formal record of the news.
Sep 26, 2024 · Filed Oct 1, 2024
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Contents
EX-99.2 · 2. Debt restructuring
2. Debt restructuring
2.1 Convertible Bond
The Company has successfully renegotiated the terms of the £8.7 million amortizing senior convertible bond (the “Convertible Bond”) held by a fund advised by Heights Capital Ireland LLC (the “Convertible Bond Investor”). Under the new terms, the Convertible Bond will be repaid and restructured as follows:
| • | Approximately £2.75 million of the Convertible Bond will be capitalised via issue to the Convertible Bond Investor of Ordinary Shares (the “Heights Conversion Shares”), at the Issue Price; |
| • | in the event that the Company were to raise more than £12.5 million (net of costs) through the Fundraise, the next £2.5 million raised in the Fundraise (above the £12.5 million (net of costs)) would be payable to the Convertible Bond Investor (“Tranche 2 Payment”); and |
| • | the balance of the Convertible Bond will be restructured as a new unsecured convertible bond (the “New Convertible Bond”). |
The Heights Conversion Shares to be issued to the Convertible Bond Investor will represent up to 9.99 per cent. of the Enlarged Issued Share Capital.
The Convertible Bond Investor will be subject to the same lock-in provisions as the Directors and certain other significant investors, being 6 months, and in the event that the Tranche 2 Payment exceeds £2 million, the Convertible Bond Investor will agree to extend itslock-in period for a further 3 month period.
The New Convertible Bond will accrue interest at a rate of 5.5 per cent. per annum, if paid in cash, or 7.5 per cent. per annum, if rolled into the principal amount, at the discretion of the Company. The New Convertible Bond will have a maturity date of 31 July 2029 and may not be converted before 1 April 2026 except in the event that the Company undertakes a further qualifying equity issuance in the future, in which case the New Convertible Bond may be converted at the placing price thereunder (which will exclude securities properly issued to employees and other staff of the Company for bona fide remuneration and incentivisation purposes).
The New Convertible Bond can be redeemed as follows:
| 1. | at any time from 1 April 2026, a holder of the New Convertible Bond can redeem any or all of the New Convertible Bond at a conversion price (subject to usual adjustment provisions) equal to 250% of the Issue Price; |
| 2. | in the event of a change of control of the Company or if the Ordinary Shares cease to be admitted to trading on AIM or the Main Market of the London Stock Exchange (or if dealing in the Ordinary Shares is suspended, |
other than in connection with a corporate reorganisation, for a period of 60 dealing days or more) or in the event that less than 20% of the Company’s issued share capital (including the Company’s American Depositary Shares (“ADS”)) comprises free float, a holder of the New Convertible Bond can require the Company to redeem all but not some of their New Convertible Bond at a conversion price equal to 120% of the principal amount of the New Convertible Bond (together with accrued but unpaid interest); and
| 3. | at any time, the Company can elect to redeem all, but not some, of the principal amount of the New Convertible Bond at a price equal to the greater of (i) the principal amount and all accrued but unpaid interest and (ii) the ‘parity value’ of the New Convertible Bond. For this purpose, the parity value is the product of: (a) such number of Ordinary Shares as would have been issued on conversion and the mean volume weighted average price of an Ordinary Share on the ten consecutive dealing days preceding the date on which such redemption is to occur. |
2.2 Accounts Payable
An accounts payable balance with a professional adviser of approximately $850,000 (the “Advisor Accounts Payable Balance”) has been restructured such that 50% of the outstanding balance ($425,000) will convert to equity at the Issue Price as part of the Conversion Shares. The remaining 50% will be repaid as follows:
| • | $325,000 will be converted to a long term unsecured note, bearing interest at 5% p.a., rolled into the principal amount of the note. The principal and interest will be repaid on the earlier of: (i) 5 years from the initiation of the note; or (ii) such earlier time as the Company is acquired by another company. The Company has the right to redeem the note at any time (the “Advisor Loan Note”); and |
| • | the remaining balance will be settled in cash from operations following the closing of the Fundraising. |
Additionally, other accounts payable creditors to the value of approximately £650,000 have agreed towrite-off their balances (the “Creditor Write-offs”).
The Company believes that the restructuring of the Convertible Bond and the Advisor Accounts Payable Balance, the creation of the New Convertible Bond and the Advisor Loan Note and the Creditor Write-offs, along with some ancillary debt restructuring, will substantially reduce the Company’s monthly cash burn and the Company estimates that this will remove more than 80 percent of the total forecasted cash obligations of the Company over the next 3 years (approximately £485,000 per month).
The Ordinary Shares issued pursuant to the debt restructuring in paragraph 2.1 and 2.2 (the “Conversion Shares”) will be issued as part of the Second Admission.
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