Sequana Medical NV (Euronext Brussels: SEQUA) (the “Company” or “Sequana Medical“), a pioneer in the treatment of drug-resistant fluid overload in liver disease and heart failure, today announces it has entered into a secured loan facility agreement of EUR 10 million with Kreos Capital VI (UK) Limited (“Kreos”). Proceeds from the loan will be used to finance general working capital requirements. The loan facility agreement allows the Company to request on an uncommitted basis additional loans of up to EUR 10 million at a later date.
Ian Crosbie, CEO of Sequana Medical, said: “We are delighted to execute this loan facility that extends our cash runway into Q3 2023 and will help us reach key milestones for both alfapump® and DSR®, our innovative therapies for drug-resistant fluid overload in liver disease and heart failure respectively. Our mission is to dramatically improve the treatment options of these large and growing patient populations who have limited treatment options today. We are very pleased to have the support of Kreos Capital, a leading growth debt provider for life sciences and healthcare companies.”
Maurizio Petitbon, General Partner at Kreos Capital, added: “We have been impressed by Sequana Medical’s innovative approach to developing effective treatments for the large potential markets of drug-resistant fluid overload and we are proud to provide this capital to help them continue with the development and commercialization of these important therapies.”
About the Kreos loan facility agreement
The loan facility, which is available for drawdown until 30 September 2022 in minimum amounts of EUR 1,500,000, matures on 30 September 2025. During the first period of 6 months from the first drawdown (extendable by mutual agreement), the Company shall only pay interest, with the loans amortising thereafter in principal and interest in equal monthly instalments until maturity. The loans under the facility accrue interest at a fixed rate of 9.75% per annum. A number of fees will be payable to Kreos, consisting notably of a transaction fee equal to 1.25% of the total loan facility amount, and an end of loan payment, payable upon final repayment of the relevant loan, equal to 1.25% of the amount drawn. Kreos will be entitled to appoint a board observer to attend meetings of the Company’s board of directors in a non-voting capacity.
Subject to approval by the Company’s extraordinary general shareholders’ meeting, Kreos shall also receive, free of charge, subscription rights for new shares, with a term of seven years, for an (i) aggregate issue price of EUR 650,000, at an issue price per share of EUR 5.31, based on the volume weighted average price of the Company’s shares during a 30 trading day period prior to signing of the loan facility, and (ii) an aggregate issue price of up to EUR 225,000 (pro rata to the drawings made under the facility) at an issue price per share based on the volume weighted average price of the Company’s shares during a 30 trading day period prior to the relevant drawings. If the shareholders do not approve the subscription rights, a fee will be payable to Kreos to ensure Kreos of an aggregate cash return of at least 1.35x on the total amount of the loan facilities.
The loans are secured on the Company’s bank accounts, receivables and movable assets, including IP rights. The loan agreement contains a change of control clause and requires such clause to be approved by the Company’s general shareholders’ meeting. The loan agreement does not contain financial covenants, but it does contain other customary restrictions on the business of the Company and its subsidiaries (such as limitations on future disposals, (additional) financial indebtedness, security and acquisitions subject to certain carve-outs and limitations) and on the ability of the Company to distribute dividends as long as the loans are outstanding.
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