Company release 25 August 2016 at 20.00 pm EET
FIT Biotech has agreed on a EUR 12,480,000 financing transaction with Bracknor Investment and intends to agree on a EUR 500,000 financing transaction with Sitra
FIT Biotech Oy (Nasdaq Helsinki: FITBIO) ("FIT Biotech" or the "Company"), a biotechnology company that develops its patented Gene Transport Unit vector technologies (GTU®; gtGTU) for next generation medical treatments, has today entered into a major financing agreement with Bracknor Investment ("Bracknor") in order to ensure the continuity of its business and the sufficiency of its working capital for the duration of the Programme assuming that the Programme is realised as planned. The Programme does not limit the Company's possibilities to obtain other kind of equity or debt financing.
The agreement relates to a funding programme of up to EUR 12,480,000 with convertible notes (the "Convertible Notes") and warrants (the "Warrants") (the "Programme"). The Programme is subject to the approval of the Extraordinary General Meeting to be held on 15 September 2016, and the Extraordinary General Meeting granting the Company's board of directors the requisite authorisations in order to implement it. The notice convening the Extraordinary General Meeting will be published through a separate company release.
Pursuant to the Programme, the Convertible Notes may be drawn in 48 sequential tranches of EUR 250,000 (each, a "Tranche") during a period of 98 months as of the date hereof. FIT Biotech has an obligation to draw a total of 20 Tranches of the Convertible Notes, i.e. a total of EUR 5 million. The remainder of the Convertible Notes, a total of 28 Tranches, i.e. EUR 7 million, may be drawn by the Company at its discretion. FIT Biotech will pay to Bracknor a commitment fee of EUR 480,000, which Bracknor will use for the subscription of a corresponding amount of Convertible Notes. The commitment fee is included in the total size of the Programme, being EUR 12,480,000.
Bracknor has the right to convert each Tranche into the Company's K shares. A Tranche may be drawn provided that all previously issued Convertible Notes within the Programme have been converted into K shares of the Company or that a cool-down period of 40 trading days has elapsed. The conversion price of the K shares is 85% of the lowest closing volume-weighted average price on the First North Finland market place during the 15 trading days immediately preceding the date when all preconditions have been met (the "Conversion Price"). The number of K shares to be issued in connection with the conversion is obtained by dividing each Tranche by the Conversion Price. The Convertible Notes bear a zero coupon rate and have a maturity of 18 months from the issuance of each Tranche. Each Tranche must at the latest be converted into K shares upon maturity.
In addition, Bracknor will receive, free of charge, with the drawing of each Tranche Warrants that entitle the holder to subscribe for the Company's K shares at a subscription price that is equal to 110% of the lowest closing volume-weighted average price on the First North Finland market place during the 15 trading days immediately preceding the drawing of the Tranche (the "Subscription Price"). The share subscription period is 5 years from the issuance of each Warrant. Bracknor has the right, but no obligation to subscribe for the Company's K shares based on the Warrants. If Bracknor subscribes for the Company's K shares based on all Warrants, the Company's share capital would increase by EUR 13,200,000 based on such subscriptions. The number of Warrants attached to each Tranche is obtained by dividing the Tranche by the lowest closing volume-weighted average price on the First North Finland market place during the 15 trading days immediately preceding the date when all preconditions have been met. Each Warrant entitles to subscribe for one K share. Bracknor will not receive any Warrants based on its commitment fee of EUR 480,000 to be used for the subscription of a corresponding amount of Convertible Notes.
Bracknor may at no time hold more than 10% of the total voting rights represented by the shares of the Company.
The first Tranche is intended to be drawn immediately after FIT Biotech's Extraordinary General Meeting to be held on 15 September 2016, assuming the Extraordinary General Meeting approves the Programme and grants the Company's board of directors the requisite authorisations in order to implement it.
The exact number of K shares to be issued based on the conversion of the Convertible Notes and the exercise of the Warrants depends, in the manner described above, on the Conversion Price determined based on the share price of FIT Biotech's K share and the Subscription Price and possible adjustments to be made in accordance with the terms and conditions of the Convertible Notes and Warrants and is thus not yet known. Assuming that the Company were to draw the maximum amount of Convertible Notes and Bracknor were to subscribe for all shares pursuant to the Convertible Notes and the Warrants, and a fictional share price of EUR 0.80, as calculated in accordance with the terms and conditions of the Convertible Notes and the Warrants, were to be used as a basis for the conversion and subscription, the number of K shares to be issued would amount to a total of 31,989,305, corresponding to approximately 53.7% of the number and votes of the Company's K shares after the issue of the Convertible Notes and the Warrants. However, due to the share price development of the Company's K share and to possible adjustments made according to the terms and conditions of the Convertible Notes and the Warrants, it may be necessary for the board of directors to apply for additional authorisations from the general meeting of shareholders in order to implement the Programme.
The drawing of each Tranche requires that certain representations and warranties given by FIT Biotech and other conditions are met. The terms and conditions of the Convertible Notes and the Warrants will be adjusted by certain reorganisations, restructurings and other situations. Bracknor has the right to terminate the Programme, if the Company's operations become subject to a material adverse effect, there has been a change of control in the Company or the Finnish Innovation Fund Sitra ("Sitra") sells more than 40% of its K shares within three years from the signing of the agreement concerning the Programme. The Company has the right to terminate the Programme before the third anniversary of the Programme, if the Company becomes subject to a major transaction resulting from a change of control, sale of of more than 50% of the assets of the Company or if Bracknor does not fulfil its obligations under the Programme, and after the issue of the nineteenth Tranche, without cause. In case the Company terminates the Programme before the third anniversary of the Programme due to sale or transfer of more than 50% of the assets of the Company or a change of control in the Company, Bracknor has the right to receive free of charge a number of Warrants that it would have received assuming the Company would have issued all Warrants to Bracknor in connection with the first twenty (20) Tranches. The Company is in certain situations obliged to redeem the outstanding Convertible Notes for 115% of their principal amount.
The preliminary terms and conditions of the Convertible Notes and of the Warrants are included in the appendix of this release and the board of directors will approve the final terms and conditions following the authorisation of the Extraordinary General Meeting.
In addition, the Company intends to agree with Sitra on a EUR 500,000 convertible note and warrants programme on similar terms as the Programme. The financing agreement with Sitra is intended to be agreed upon following the Extraordinary General Meeting to be held on 15 September 2016. The board of directors requests authorisation from the Extraordinary General Meeting in order to implement the financing agreement with Sitra.
Listing of the K Shares
FIT Biotech intends to file a listing application with Nasdaq Helsinki Ltd in order to list the K shares subscribed for due to conversion of the Convertible Notes or exercise of the Warrants immediately after they have been issued. The Company may also use series K treasury shares under the Programme, such treasury shares will be listed as needed.
James Kuo, CEO of FIT Biotech, commented: "We are extremely excited about this financing agreement with Bracknor, which will support our gene transfer vector research program and the manufacturing of investigational DNA-based medicines and vaccines for further clinical trials, and working capital needs. We look forward to utilizing the Bracknor financing to achieve our next series of drug development milestones."
Pierre Vannineuse, CEO of Bracknor Investment Group, commented: "This long-term financial agreement is another example of our strong interest in working with highly innovative biomedical companies in the Nordic Markets. We are convinced that FIT Biotech has pioneered in non-viral gene transfer vectors and possesses the corresponding intellectual properties to enable their global commercialization."
Aboudi Gassam, Chairman of Bracknor Investment Group, commented: "We are highly enthusiastic to working with another company in Finland to support the development of what we believe will be the next generation of medicines based on DNA versus proteins and small molecules. Transferring DNA is far more efficient in allowing the patient to produce their own therapeutic biological or vaccine antigen. FIT Biotech's gene transport technologies meet a significant medical challenge in the usability and safety of gene based treatments and therapeutic DNA vaccines."
Further information on FIT Biotech's company releases, including financial statement releases and resolutions of the annual general meeting, are available at FIT Biotech's website www.fitbiotech.com.
FIT Biotech Oy
For further information:
FIT Biotech Oy
Tel: +358 44 0331307
Chairman of the Board of Directors
FIT Biotech Oy
Tel: 050 372 0824
Certified Advisor: Translink Corporate Finance Oy, telephone +358 20 743 2790
About FIT Biotech:
FIT Biotech Oy is a Finnish biotechnology company established in 1995. The company develops and licenses its patented GTU® (Gene Transport Unit) vector technology for new-generation medical treatments. GTU® is a gene transport technology that meets an important medical challenge in the usability of gene therapy and DNA vaccines.
FIT Biotech applies GTU® technology in its drug development programmes. Application areas include cancer (gene therapy) and infectious diseases such as HIV and tuberculosis, as well as animal vaccines.
FIT Biotech shares are listed on the First North Finland marketplace maintained by Nasdaq Helsinki Oy. The trading code is FITBIO. For more information please visit www.fitbiotech.com.
About the Bracknor Investment:
Bracknor Capital Ltd is the Investment Manager platform of the Private Mutual Fund Bracknor Fund Ltd. Bracknor's mandate is to invest globally in SMEs that bears unique competitive advantages and true potential, providing them with paramount working capital or growth capital needed to foster and ignite their growth.
Bracknor, through its Chairman, Mr Aboudi Gassam, is backed up by the Saudi Group MS Group (Jeddah) -http://mscc.com.sa and aim to activate intra portfolio synergies to bring relevant opportunities and cooperative developments to Bracknor's portfolio companies particularly in the GCC (Gulf Cooperation Council) Region.www.bracknor.com
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Source: FIT Biotech Oy via GlobeNewswire
Last updated on: 26/08/2016