Resverlogix (TSX:RVX, Stock Forum) got a shot in the arm today as it announced the company had entered into an amended and restated loan agreement with Citibank for an additional $30.0 million bringing the total to $68.8 million.
According to the news release, the loan will mature on August 28, 2014 and may be paid in full or in part without penalty with interest being paid annually in arrears at a rate equal to the per annum Canadian one-year LIBOR swap rate plus 3.14%, to be reset annually.
The loan will be secured by an irrevocable $68.8 million Standby Letter of Credit arranged by Eastern Capital Limited which will be maintained until the maturity of the loan.
The company will direct net proceeds toward funding clinical trials in targeted high-risk patient groups as well as research and development activities, not to mention general and administrative expenses and general corporate purposes.
As a result, the company has agreed to indemnify Eastern for all liabilities, costs and expenses arising from any payments made to Citibank under the Letter of Credit and it will also pledge its patents and certain tax losses and pools to Eastern as security for its obligations under the indemnity.
Eastern will also receive 5.0 million share purchase warrants from the company exercisable at a rate of $0.75 per warrant for a period of up to five years.
The amendment closure is still subject to customary closing conditions and shareholder approval as well as necessary regulatory approval.
Company president and CEO, Donald McCaffrey, commented, “We are pleased to have the opportunity to further use our arrangement with Citibank and Eastern to fund our Phase 2b trial with considerably less dilution than conventional equity financing and with the flexibility to repay the loan in whole or in part at any time.”
He then summed up, “We are looking forward to initiating our new RVX-208 clinical trials that will be based on the enormous epigenetic-related data that was generated in the exploratory ASSURE and SUSTAIN trials. RVX-208 has a very bright future in many indications ranging from arterial plaque regression to inflammatory diseases and various metabolic disorders.”
Resverlogix was in the news recently when the company closed a $2.3 million private placement in the middle of June.
Shares gained 10.67% on the news to $0.83 per share.
Currently there are 81.7m outstanding shares with a market cap of $67.8 million.