Crescita Therapeutics™ Announces Amended Loan Agreement with Knight Therapeutics
Crescita Therapeutics Inc. (TSX:CTX) (Crescita or the Company), a commercial dermatology company with a portfolio of non-prescription skincare products and prescription drug products, today announced it has entered into an amended loan agreement with Knight Therapeutics Inc. (Knight) (TSX:GUD).
On September 1, 2016, the Company acquired 100% of the equity of INTEGA Skin Sciences Inc. (INTEGA), a private company located in Laval, Québec that develops, manufactures, sells and markets science-based quality non-prescription skincare products. Concurrent with the Company's acquisition of INTEGA, the Company assumed approximately $6.8 million (currently $6.6 million of principal outstanding) of an INTEGA loan from Knight, which was secured by a letter of credit issued by a Canadian chartered bank on the Company's behalf. The letter of credit was secured by cash held in the Company's account with the bank.
Under the terms of the amended loan agreement, Crescita will immediately repay $2.5 million of the loan (reducing the principal amount to $4.1 million) and Knight has agreed to release the letter of credit in exchange for a general security interest over all of Crescita's assets. As a result, the Company now has access to an additional $6.0 million of its cash (after the repayment described above) – that was previously restricted under the terms of the letter of credit – to fund its operations. The loan continues to bear interest at 9% per annum and matures on January 22, 2022. The loan can be repaid by the Company at any time prior to December 31, 2018 without interest or penalty. The loan does not contain any financial covenants. Under the amended loan, Crescita has agreed to make additional repayments such that the principal amount of the loan is reduced to $2.5 million by December 31, 2018.
The terms and conditions of the amended loan are set forth in an Amended and Restated Loan Agreement between Crescita and Knight, a copy of which will be filed under the Company's profile at www.sedar.com. The summary of the amended loan above is qualified by reference to the specific terms of the loan agreement.
The Company also announced that funds associated with Bloom Burton & Co. (Bloom Burton) have agreed to invest $1.0 million in the Company in exchange for a convertible debenture that will bear interest at 9% (payable in cash) and will be convertible into common shares at the option of the holder at an initial conversion price of $1.00 per share (subject to customary adjustments). The convertible debenture matures on June 30, 2022, unless converted earlier in accordance with its terms. Commencing after the second anniversary of the issue date, the Company has the option to force conversion if the closing price of its common shares exceeds 150% of the conversion price on 20 trading days in any 30 day period.