GI Dynamics® Inc. (ASX:GID), a medical device company that has
commercialized EndoBarrier® in Europe, the Middle East and South
America for patients with type 2 diabetes and obesity today
announced a US $5,000,000 convertible note financing.
GI Dynamics conducted the financing solely with its major
shareholder, Crystal Amber Fund Limited. The financing is intended
to provide GI Dynamics with adequate working capital through the
remainder of 2017.
The key terms of the financing are outlined in Attachment 1.
In connection with the financing, GI Dynamics has been granted a
waiver from ASX Listing Rule 10.1 to facilitate the security
arrangements. The terms of the waiver are outlined in Attachment
2.
In accordance with the terms of the waiver, GI Dynamics confirms
it will need to raise additional capital before the end of the
first quarter of 2018 to continue to pursue its current business
objectives as planned, to continue to fund its operations, and to
repay the Note and discharge the security (to the extent the Note
is not, or is not able to be, converted). Currently, the Company is
evaluating a number of fundraising alternatives that could involve
any combination of collaborative arrangements, strategic alliances
and / or additional equity or debt financing. Fundraising may also
come from other sources as the Company works to resolve
nonconformance issues in connection with the suspension of its CE
Mark.
“We are pleased to announce this bridge financing and appreciate
the support and confidence from the Crystal Amber Fund,” said Scott
Schorer, president and chief executive officer of GI Dynamics.
“This financing helps position the company to work through legacy
issues and position for a successful equity raise later in 2017. We
believe that the terms of this financing are in the best interests
of our shareholders and we look forward to sharing further
progress.”
About GI Dynamics
GI Dynamics, Inc. (ASX:GID) is the developer of EndoBarrier, the
first endoscopically-delivered device approved for the treatment of
type 2 diabetes and obesity. EndoBarrier is not approved for sale
in the United States and is limited by federal law to
investigational use only in the United States. Founded in 2003, GI
Dynamics is headquartered in Boston, Massachusetts. For more
information, please visit www.gidynamics.com.
Forward-Looking Statements
This announcement contains forward-looking statements concerning
future cash requirements and the types and timing of completing an
additional financing. These forward-looking statements are based on
GI Dynamics management’s current estimates and expectations of
future events as of the date of this announcement. Furthermore, the
estimates are subject to several risks and uncertainties that could
cause actual results to differ materially and adversely from those
indicated in or implied by such forward-looking statements. These
risks and uncertainties include but are not limited to, risks
associated with obtaining funding from third parties; the
consequences of stopping the ENDO trial and the possibility that
future clinical trials will not be successful or confirm earlier
results; the timing and costs of clinical trials; the timing of
regulatory submissions; the timing, receipt and maintenance of
regulatory approvals, including the reinstatement of any suspended
approvals; the timing and amount of other expenses; the timing and
extent of third-party reimbursement; risks associated with
commercial product sales, including product performance,
competition, market acceptance of products, intellectual-property
risk; risks related to excess inventory; and risks related to
assumptions regarding the size of the available market, the
benefits of our products, product pricing, timing of product
launches, future financial results and other factors, including
those described in our filings with the U.S. Securities and
Exchange Commission. Given these uncertainties, one should not
place undue reliance on these forward-looking statements. We do not
assume any obligation to publicly update or revise any
forward-looking statements, whether as a result of new information
or future events or otherwise, unless we are required to do so by
law.
ATTACHMENT 1
Financing Terms
The key terms of the financing are as follows:
(a) Borrower / Issuer: GI Dynamics,
Inc.
(b) Lender / Holder: Crystal Amber
Fund Limited
(c) Principal Amount / Face Value:
US $5,000,000
(d) Interest: 5% per annum,
compounded annually
(e) Conversion: Subject to the
receipt of shareholder approval (for the purposes of, among others,
ASX Listing Rule 10.11), the Principal Amount is convertible into
CHESS Depositary Interests (CDIs) (i) at the option of the Lender
(based on a 5-day VWAP) or (ii) automatically on the occurrence of
a “qualified financing” (essentially a further equity raising of at
least US $10 million). If shareholder approval of the right of
conversion is not obtained the loan will not be convertible into
CDIs. In the event that the Borrower issues additional CDIs in a
subsequent equity raising at a price per CDI that is less than the
then-effective optional conversion price (based on a 5-day VWAP),
the Lender has a 30-day option to convert (if the abovementioned
shareholder approval of the right of conversion has been/is
obtained) at an adjusted conversion price reflecting, on a weighted
average basis, the lower price per CDI. The number of CDIs that the
Lender may acquire upon conversion of the loan at this adjusted
conversion price is limited to the number that maintains the
Lender’s fully-diluted ownership percentage of GI Dynamics at the
same level as existed immediately preceding the applicable
subsequent equity raising.
(f) Security: All of the Borrower’s
right, title and interest in, to and under all of GID’s assets
(g) Maturity / Repayment: 31
December 2018 or if shareholder approval in relation to the right
of conversion (referred to in paragraph (e) above) is not obtained
then the earlier of 31 December 2018 and the date 6 months after
the date on which shareholder approval of the right of conversion
is not obtained. If shareholder approval is not obtained, the
Lender is entitled to receive 110% of the unpaid principal plus
unpaid interest (by way of repayment)
(h) Change of Control of GID: Where
GID shareholders receive cash consideration on completion of a
change of control transaction, the Lender is entitled to receive
110% of the unpaid principal plus unpaid interest. Where GID
shareholders receive scrip consideration on completion of a change
of control transaction, the Lender is entitled (subject to the
shareholder approval referred to in paragraph (e) above being
obtained) to exercise the conversion option
(i) Prepayments: Not permitted
without the Lender’s consent
(j) Transferability /
Assignability: The convertible note is not transferrable /
assignable within 12 months after its issue, except as permitted by
the Corporations Act 2001 (Cth)
(k) Transfer of CDIs issued on
conversion: Any CDIs issued on a conversion are not
transferrable within 12 months after their issue (and the CDIs will
be subject to a holding lock), except as permitted by the
Corporations Act 2001 (Cth)
(l) Events of Default: On the
occurrence of an event of default, all unpaid principal plus unpaid
interest generally becomes immediately due and payable
(m) Use of Funds: General corporate
purposes
ATTACHMENT 2
ASX Waiver
The terms of the waiver granted by ASX from ASX Listing Rule
10.1 are as follows:
“Based solely on the information provided, ASX grants GI
Dynamics, Inc. (the “Company”) a waiver from listing rule 10.1 to
the extent necessary to permit the Company to grant security over
the assets of the Company in favor of Crystal Amber Fund Limited
(the “Lender”) (the “Security”) to secure the Company’s obligations
under a secured term loan facility of US $5,000,000 (the “Loan
Facility”) provided by the Lender without obtaining shareholder
approval, on the following conditions:
a) The Security includes a term that if an event of default
occurs and the Lender exercises its rights under the Security,
neither the Lender nor any of their associates can acquire any
legal or beneficial interest in an asset of the Company or its
subsidiaries in full or part satisfaction of the Company's
obligations under the Security, or otherwise deal with the assets
of the Company or its subsidiaries, without the Company first
having complied with any applicable listing rules, including
listing rule 10.1, other than as required by law or through a
receiver, or receiver or manager (or analogous person) appointed by
the Lender exercising their power of sale under the Security and
selling the assets to an unrelated third party on arm's length
commercial terms and conditions and distributing the cash proceeds
to the Lender or any of its associates in accordance with their
legal entitlements.
b) A summary of the material terms of the Security is made in
each annual report of the Company during the term of the
Security.
c) Any variations to the terms of the Security which is not a
minor change or inconsistent with the terms of the waiver must be
subject to shareholder approval.
d) The Company and the Lender must seek to discharge the
Security when the funds advanced to the Company are repaid, or if
it is not discharged, seek shareholder approval for the
continuation of the Security for any further period.
e) The Company immediately releases to the market an
announcement which sets out the terms of the waiver, and the
Company’s plans with respect to the (i) repayment of the funds
advanced under the Loan Facility, and (ii) discharge of the
Security, including the timeframe within which it expects the
repayment and discharge to occur.”
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version on businesswire.com: http://www.businesswire.com/news/home/20170615006393/en/
GI Dynamics, Inc.Investor RelationsUnited States:Janell
Shields, +1-781-357-3280investor@gidynamics.comorMedia
RelationsUnited States:Nicole Franklin,
+1-617-657-1312nfranklin@jpa.com
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