Interpace Diagnostics Group, Inc. (NASDAQ:IDXG) announced that it has entered into agreements to successfully restructure its secured debt with the former RedPath Shareholders and concurrently terminate its royalty and milestone obligations.
The Company’s outstanding secured debt to RedPath amounting to $9.34 million is being acquired for approximately $8.9 million (95% of face value) by an institutional investor. Subsequently, the institutional investor has agreed to exchange such debt for an approximately $5.32 million secured convertible note with a fixed conversion price of $2.44 (“fixed conversion price”) and an approximately $3.55 million secured note issued by the Company. The new notes will bear nominal interest at the Federal interest rate and, along with interest, will mature on June 22, 2018 at 125% of face value, if not previously 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 consecutive 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 prior to 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 expected 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, initially by approximately $460,000, eliminate our quarterly repayment obligations in 2017 by approximately $4 million, eliminate future royalty and milestone obligations that will result in an immediate positive impact on our balance sheet of approximately $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. Including the gross proceeds from public offerings of approximately $14 Million, we have increased our stockholder’s equity by over $17 million since December 2016.”
Shares of Interpace Diagnostics are currently trading at $2.59, down $0.27 or -9.44%. IDXG has a 1-year high of $19.80 and a 1-year low of $0.70. The stock’s 50-day moving average is $2.82 and its 200-day moving average is $1.73.
Interpace Diagnostics Group, Inc. provides commercialization services to biopharmaceutical companies. It focuses on developing and commercializing molecular diagnostic tests, leveraging the latest technology and personalized medicine for patient diagnosis and management. The company offers commercialized molecular tests which include PancraGen, ThyGenX, and ThyraMIR. PancraGen for the diagnosis and prognosis of pancreatic cancer from pancreatic cysts; ThyGenX, for the diagnosis of thyroid cancer from thyroid nodules utilizing a next generation sequencing assay and ThyraMIR, for the diagnosis of thyroid cancer from thyroid nodules utilizing a proprietary gene expression assay.