RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:Jannsen Biotech extends its partnership with BTI on xB3!! Well, there is an "earlier" clause that can be activated before the June 30 date, ronrydell.
it's a really important clause. All three new promissory notes, the Midatech $750,000 note, and the Lind $350,000 and $510,000 notes, have the same terms except that Lind has first call on Bioasis assets and Midatech has second call. The original Lind loan, the convertible security funding agreement (CSFA), was amended when the new notes were created to include a call on Bioasis assets should Bioasis experience "an event of default," which has very serious definitions as found in Schedule D of the Bioasis Information Circular.
The net effect is that all four loans become immediately due if there is "an event of default." If there is no "event of default" then the Midatech and two Lind promissory notes do not become payable until June 30.
I have described these terms in detail
in a previous post. The "event of default" that is also descrfibed in that post supersedes the June 30th due date. In other words, it appears that a missed payment on the original loan, the CFSA, will cause all loans to be called in with the Lind then having the right to acquire Bioasis assets.
Notice below that "Midatech will use its commercially reasonable efforts to provide a US$750,000 bridge loan to Bioasis". We should learn by Feb 7 whether Bioasis received the final $250,000 of the $750,000 loan from Midatech.
I'm not creating this stuff. This is what is in the agreements. I posted it here for good reasons. The loan for $750,000 may not materialize in total. The rest of it may already have been spent. The $350,000 loan can only be used as described.below. If you were Midatech, would you want to loan the remaining $259,000 after "the arrangement" collapsed?
Thinking that there is a free and clear run to June 30 is not what the agreements are saying.
jd
Here is a summary of notes and CSFA amendments from Page 17 of the Information Circular:
In connection with the Arrangement, Bioasis and Lind have entered into a waiver and amending agreement in respect of the CSFA (the “CSFA Waiver and Amending Agreement”) and Bioasis, Lind and Midatech have entered into a tripartite agreement (the “Tripartite Agreement”), pursuant to which, among other things:
- Lind agreed to waive Bioasis’ obligations to make Repayments until December 31, 2022
- Lind was granted a first ranking general security interest over Bioasis’s assets and its Subsidiaries’ assets as security for Bioasis’s obligations under the CSFA, the Holiday Note (as defined below) and the Bridge Note (as defined below).
- Bioasis issued a new promissory note to Lind in the principal amount of $510,000 (the “Holiday Note”) in exchange for the payment holiday. The Holiday Note bears interest at the rate of 2% per month and is payable on the earlier of (i) an event of default, (ii) June 30, 2023 or (iii) the completion of the Arrangement.
- Lind provided $350,000 of financing for Bioasis (less a holdback of $50,000 for legal costs) in exchange for Bioasis issuing to Lind a new promissory note in the original principal amount of $350,000 (the “Bridge Note”). The proceeds of the Bridge Note may only be used for the purposes of paying professional advisory fees in connection with the Arrangement. The Bridge Note has the same terms as the Holiday Note.
- Concurrently with the completion of the Arrangement, Midatech will assume Bioasis’ obligations under the CSFA and make the following cash payments to Lind: (a) 50% of all outstanding principal under the CSFA, (b) all unpaid accrued interest under the CSFA, and (c) all amounts payable under the Holiday Note and Bridge Note. The remaining 50% of the outstanding principal under the CSFA will be settled by Midatech by issuing securities to Lind at the same price, and on the same terms and conditions (in all cases on a “most favoured nations” basis) as the Concurrent Financing. Once these payments are received, Lind will release and discharge its security interests.
Q: Will Bioasis Receive any Interim Funding in Connection with the Arrangement?
Yes. As noted above, Bioasis received $350,000 in bridge funding from Lind (less the $50,000 holdback) pursuant to the CSFA Waiver and Amending Agreement. In addition, Midatech will use its commercially reasonable efforts to provide a US$750,000 bridge loan to Bioasis (the “Midatech Bridge Loan”), comprised of three equal advances of $250,000 to Bioasis on (i) December 19, 2022, (ii) January 3, 2023, and (iii) February 6, 2023, on the terms and conditions as set forth in the Loan Note. The Midatech Bridge Loan is evidenced by a promissory note that Bioasis issued to Midatech and has substantially similar terms as the Bridge Note, except that the Midatech Bridge Loan is secured by a second ranking general security interest over Bioasis’ assets and its Subsidiaries’ assets and it is subordinated to the CSFA, the Holiday Note and the Bridge Note.
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