OTTAWA, ON, Aug. 11, 2022 /CNW/ - Tetra Bio-Pharma Inc. ("Tetra" or the "Company") (TSX: TBP) (OTCQB: TBPMF) (FRA: JAM1), a leader in cannabinoid-based drug discovery and development, announced today that it has entered into a subscription agreement (the "Subscription Agreement") with Global Corporate Finance Opportunities 16 (the "Investor"), an investment vehicle advised by Alpha Blue Ocean Inc. ("ABO"), whereby Tetra has agreed to issue to the Investor (i) senior unsecured convertible debentures ("Debentures") in the aggregate principal amount of up to $6,000,000, and (ii) warrants ("Warrants") to purchase common shares ("Common Shares") in the capital of the Company (collectively, the "Offering").
Created in 2017, ABO is a pioneer in alternative financings, providing innovative financing solutions for companies across the globe. In less than 5 years, ABO, founded by Pierre Vannineuse, has executed more than €1.5 billion in financial commitments and more than 90 transactions, with a high focus on the life science sector.
"The Company is pleased to announce our financing agreement with Alpha Blue Ocean," says Guy Chamberland, CEO of Tetra. "This agreement gives us capital to fund our operations and further pursue the development of our drug candidates".
"We are excited to partner with Tetra, a leader in cannabinoid-based drug discovery and development," says Amine Nedjai, CEO of ABO. "This financing agreement, ABO's first on the TSX, will provide funds for the Tetra team to accelerate its drug development pipeline."
Terms of the Subscription Agreement:
The Investor has agreed to subscribe for up to $6,000,000 aggregate principal amount of Debentures and accompanying Warrants. The Debentures will be convertible into, and the Warrants will be exercisable for, Common Shares, at prices to be determined at each closing of the 15 separate tranches (each, a "Tranche") pursuant to which the Debentures and accompanying Warrants are issuable.
Upon closing of each Tranche, the Company will issue the Debentures in the principal amount of $400,000.
The subscription price for each Debenture is 100% of its face value and the Debentures will not bear interest. Each Debenture matures 12 months following the applicable issue date (the "Maturity Date").
The Debentures will be automatically converted into such number of Common Shares as is equal to the aggregate principal amount of the Debentures being converted, divided by the applicable conversion price immediately following the earlier of: (i) five business days after delivery by the holder of a conversion notice, or (ii) the Maturity Date.
In the event of a default under the Debentures, the holder has the right to accelerate the Maturity Date and immediately convert all or any of its Debentures into Common Shares or to require the Company to immediately redeem in cash all or any of its Debentures. The Debentures may also, at Tetra's option, be redeemed in cash prior to the Maturity Date subject to a 5% premium.
Each Tranche will include three-year Warrants to acquire Common Shares of the Company at an exercise price equal to 130% of the volume weighted average price of the Common Shares on the Toronto Stock Exchange (the "Exchange") observed over the 5 trading days immediately preceding the date of issuance of the Warrants.
The closing of the first Tranche for $400,000 principal amount of Debentures (the "First Closing") is anticipated to close shortly and the closing of additional Tranches, if completed, will take place during the 36-month commitment period. Details of the conversion price for the Debentures, the number of Warrants and exercise price of the Warrants issued pursuant to the First Closing will be disclosed in a subsequent press release.
The Company will pay ABO commitment and service fees in the amount of $40,000 each in connection with the closing of each Tranche, representing $600,000 in fees in the aggregate assuming the completion of all 15 Tranches, or 10% of the full aggregate principal amount of the Debentures, and will reimburse ABO for its expenses in connection with the Offering.
The Company intends to use the net proceeds of the Offering to finance the manufacturing costs of its QIXLEEF drug candidate, to repay indebtedness and for working capital. The Offering and listing of the Common Shares issuable on the conversion of the Debentures and on the exercise of the Warrants have been conditionally approved by the Exchange. The Offering remains subject to the receipt of final approval of the Exchange.