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KaloBios Pharmaceuticals LOI Approval Sought

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According to the U.S. Bankruptcy Court docket, KaloBios Pharmaceuticals filed a motion for an order (i) approving the Debtor’s entry into certain letter of intent (LOI) and annexed term sheet between the Debtor and Cheval Holdings, Black Horse Capital and Black Horse Capital Master Fund (collectively, stalking horse); (ii) approving the bidding and auction procedures to the proposed bid procedures’ order governing the Debtor’s investigation, receipt and consideration of competing and supplemental plan sponsorship proposals; (ii) approving and authorizing the break-up fee; (iii) scheduling and authorizing the Debtor to conduct an auction for proposed transactions and (iv) approving the procedures notice and the related noticing procedures.

The motion states, “The material terms of the LOI include the following: An aggregate Financing Commitment of a total of $10 million, to be advanced $3 million as D.I.P. Financing and $7 million as Exit Financing. Upon the occurrence of a Triggering Event stalking horse shall be entitled to a breakup fee and expense reimbursement which shall consist of: (1) either, as determined in Stalking Horse’s discretion,: (a) payment in the amount of $300,000 (‘Cash Option Breakup Fee’), or (b) the option to purchase $2 million of stock in the reorganized Debtor at a price of $1.75 per share (‘Stock Option Breakup Fee’); and (2) reimbursement of up to $200,000 of reasonable documented attorneys’ fees and other expenses incurred by Stalking Horse in connection with this transaction (‘Breakup Attorneys’ Fees’).”

The motion continues, “The D.I.P. Financing shall be $3 million (with OID of 6 points) and shall be made available in one draw. The DIP Financing will consist of a credit facility secured by a priming lien on all of the Collateral. The DIP Financing shall be subject to: (i) a commitment fee of $150,000 (5%) (‘D.I.P. Financing Commitment Fee’); (ii) Original Issue Discount of 6 points ($191,000) (‘OID’); and (iii) interest at the annual rate of twelve percent (12%) calculated on the basis of a 360-day year and actual days elapsed, which Interest rate shall increase by five percent (5%) upon an Event of Default….The conversion price for the DIP Financing shall be $1.75 per share based upon current outstanding shares of 4,451,000….The Exit Financing shall be in the amount of $7 million….On the effective date of the Stalking Horse Plan, in exchange for the Exit Financing Amount plus the Exit Financing Commitment Fee, Debtor shall issue to the Stalking Horse 3,745,000 shares of the reorganized Debtor based upon current outstanding shares of 4,451,000.”

The Court scheduled a March 21, 2016 hearing to consider the LOI, with objections due by March 17, 2016. Read more KaloBios bankruptcy news.

The post KaloBios Pharmaceuticals LOI Approval Sought appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.


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