Interpace Diagnostics Group, Inc. (NASDAQ: IDXG) (the “Company”), a fully integrated commercial company that provides clinically useful molecular diagnostic tests and pathology services, recently declared that it has reached agreements to successfully restructure its secured debt with the former RedPath Shareholders (“RedPath”) and conpresently terminate its royalty and milestone obligations.
The Company’s outstanding secured debt to RedPath amounting to $9.34 million is being attained for about $8.9 million (95% of face value) by an institutional shareholder. Subsequently, the institutional shareholder has agreed to exchange such debt for an about $5.32 million secured convertible note with a fixed conversion price of $2.44 (“fixed conversion price”) and an about $3.55 million secured note issued by the Company. The new notes will bear nominal interest at the Federal interest rate and, together with interest, will mature on June 22, 2018 at 125% of face value, if not formerly converted to common stock. Further, upon conversion and/or redemption of 55% of the balance of each of the notes, all secured liens on the Company’s assets will be terminated. If the Company’s common stock trades above 135% of the fixed conversion price for five successive trading days, the Company will have the option to convert the convertible note into shares of its common stock at the fixed conversion price. The Company also will have the right to redeem the notes before their maturity at prices ranging from 115% to 125% of the principal amount of the notes depending on the time of redemption.
In addition the Company will issue to RedPath 5-year warrants to acquire an aggregate of 100,000 shares of its common stock at $4.69 per share. RedPath agreed to terminate all future royalty and milestone obligations as a result of the Company’s acquisition of RedPath.
The restructuring transaction is predictable to close on or about March 23, 2017, subject to customary closing conditions.
Jack Stover, President and CEO of the Company, stated: “The objective of this restructuring is to reduce our principal obligation, at first by about $460,000, eliminate our quarterly repayment obligations in 2017 by about $4 million, eliminate future royalty and milestone obligations that will result in an immediate positive impact on our balance sheet of about $6 million and provide an opportunity to completely eliminate all liens and security interests in our assets with either the conversion or redemption of 55% of each of the new notes.”
“With this restructuring, we will have a cleaner, stronger balance sheet,” said Mr. Stover, “This is another key step in positioning our Company for long-term success. Counting the gross proceeds from public offerings of about $14 Million, we have raised our stockholder’s equity by over $17 million since December 2016.”
Richard Tang manages a private investment portfolio full time, and provides mutual fund analysis and buy recommendations to individual investors managing their own investments. He holds a B.A. from Emory University, where he concentrated on history and economics.
He trade for himself via ETFs and futures markets, with interests in commodities generally and a special interest in precious metals.