Sydney, May 15, 2006 AEST (ABN Newswire) - Life Therapeutics (ASX: LFE) today announced it has secured funding facilities of approximately A$35.3 million with US based investment fund Cornell Capital Partners Offshore LP.
Key points:
- Convertible Loan of US$4 million, with funds to be used immediately to open five new collection centres.
- Standby Equity Line of Credit Facility of A$30 million available over five years to provide funding certainty for new opportunities as they become available.
- Life Therapeutics to rapidly accelerate opening of new centres to meet growing demand for normal source plasma.
Specific details of the funding arrangements are outlined in the relevant sections below in this press release.
"The US$4 m proceeds from the Convertible Loan will allow us to accelerate the opening of at least 5 new collection centres immediately." said Dr Hari Nair, CEO of Life Therapeutics. "In addition, the Equity Line represents a flexible funding option for the company moving forward. Whilst we do not intend to rely solely on the Equity Credit Line for short term funding requirements, it provides a degree of flexibility in our plans to open further centres."
LFE recently advised the market that it had secured two long term contracts to supply normal source plasma to a number of large US based plasma fractionators. These customers have expressed a willingness to purchase any additional plasma that LFE can produce, over and above the contracted volumes.
Dr Hari Nair, Life Therapeutics CEO added, "It is encouraging to see US based investors supporting Life Therapeutics. This funding is competitively priced, and the flexibility of the Equity Credit facility will allow us to act with certainty in securing new business initiatives, as and when they arise."
"We should stress that we do not need A$30m in funding at this point to grow the business. However, the funding option also allows us to act quickly on other opportunities that may arise in the short term. The ability to place small tranches of shares at such a small discount is an extremely effective way for LFE to fund the expansion of its operations. We have stated in the past that we will actively pursue M&A as a means to grow the business. This funding arrangement gives us a degree of certainty when assessing such opportunities going forward." added Dr Nair.
"LFE is an outstanding investment opportunity for us," said Philip Ho, Managing Director of Cornell Capital, "LFE has a demonstrated track record of acquiring and integrating blood plasma collection businesses, and is uniquely positioned as the leading North American supplier into the rapidly growing Hyper Immune Plasma market."
Founded in 2001, Cornell is managed by US-based Yorkville Advisers LLC. The Cornell group of funds specializes in providing equity and equity-linked capital to growth-oriented public companies in the United States of America (USA), Canada, the United Kingdom (UK), Singapore and Australia. To date, the group has made available in excess of over US$1 billion for over 100 publicly listed companies in these countries. The Cornell group also enjoys a rapidly growing reputation in the Asia Pacific region with over 25 transactions completed in Singapore and Australia in the last three years.
Facilities similar to this equity line of credit are widely used by growing companies in the USA and UK, and provide flexibility in being able to secure new opportunities in the knowledge that pre-committed funding options are available.
The funding was arranged by Emerging Growth Capital Pty Ltd.
Details of Funding Facilities.
Convertible Note:
Face Value: US$ 4 million
Coupon: 8.0% per annum
Term: 360 days
Conversion Price: The conversion strike price for the Convertible Notes is A$2.12 per share which is 125% of the VWAP for the 5 day period 8th May to 12th May inclusive.
Equity Credit Line:
Under the terms of the facility LFE may issue shares to Cornell over the next five years, up to a total of A$30 million. LFE may issue shares in tranches of A$450,000 in any five day period. These amounts may be varied, subject to agreement between the parties.
Shares issued to Cornell will be priced at the lowest daily VWAP during any given five day pricing period, less a 3% commission.
Contact
Australia:
Prakash Patel
Company Secretary
TEL: +61 2 8977 9000
USA:
Jesse McCorvey
Vice President Corporate Communications
TEL: +1 404-300-5030
Emerging Growth Capital Pty Ltd:
Dr Gregory Ward
Associate Director
TEL: +61 2 9222 1991
Email: greg@egcapital.com
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