RE:RE:RE:RE:RE:Market Cap - Too LowJune 26 -
Deerfield Financing Agreement Amendment As a result of the previously announced United States Court of Appeals decision related to the United States patents 6,926,907 and 8,557,285 covering VIMOVO (the '907 and '285 Patents), and the potential future financial implications thereof to Nuvo, Deerfield Management Company, L.P. (Deerfield) and certain of its affiliated funds, as lenders, and the Company have agreed to an amendment to its financing agreement to provide, among other things, for a payment deferral mechanism in the event that VIMOVO U.S. market exclusivity is lost and an extension of the maturity date in respect of its US$6.0 million bridge loan by 6 months to December 31, 2020.
The amendment will allow Nuvo to defer a portion of the mandatory minimum quarterly prepayments by the difference between one quarter of the existing US$7.5 million minimum annual royalty due from VIMOVO sales in the U.S. and the actual amount of royalties received in the applicable quarter in the event VIMOVO U.S. market exclusivity is lost earlier than had been expected prior to the United States Court of Appeals decision. The amount of any prepayment so deferred would, until repaid in accordance with the amendment, be subject to an interest rate of 12.5% per annum.
"This amendment to our Facility Agreement with Deerfield provides Nuvo with the flexibility we need to continue to invest in growth focused activities in the event we are not able to maintain VIMOVO U.S. market exclusivity," commented Jesse Ledger, Nuvo's President and CEO.
daydream1 wrote: Regardless of the share price Deefield will get its money + interest back. Nuvo has to make mandatory quarterly loan payments equal to the greater of US$2.5 million and 50% of excess cash flow to Deefield to repay the senior secured loan. A higher share price is just gravy for Deefield.
From Nuvo's website
Financing: Deerfield has provided a binding commitment letter to Nuvo to be the sole financier and to fund the Proposed Transaction in its entirety (the Financing). The commitment letter from Deerfield provides Nuvo with the following:
- US$52.5 million of 6-year term, 3.5% p.a. interest, senior secured convertible debentures with a conversion price of US$2.70 to fund the acquisition of the Canadian operations and working capital purposes;
- US$60 million of 6-year term, 3.5% p.a. interest, senior secured loan for an issue price of US$47.5 million to Nuvo Pharmaceuticals (Ireland) Limited to fund the acquisition of the royalty and product interests in Vimovo, Yosprala and MT400. Nuvo will make mandatory quarterly loan payments equal to the greater of US$2.5 million and 50% of excess cash flow;
- Nuvo will issue to Deerfield, for an aggregate purchase price of US$12.5 million, warrants to purchase approximately 25.6 million common shares at an exercise price of C$3.53 and with a 6-year life (the Warrants). The proceeds from the exercise of Warrants will initially be used to reduce the amount owing on the senior secured loans;
- US$3.0 million of 18-month term, 12.5% p.a. interest, senior secured loan to Nuvo for working capital purposes;
- Deerfield (and any permitted transferee) will be prohibited from converting debentures or exercising warrants if it would result in Deerfield (and its affiliates) holding more than 4.985% of the total issued securities of Nuvo; and
- There will be no changes to the Nuvo senior management team or board of directors.