Daily News: August 28, 2012

Resverlogix Secures $25 Million Term Loan From Citibank

Resverlogix Corp. announced that it has entered into a $25 million Loan Agreement with Citibank. Resverlogix received the $25 million upon closing of the loan. The loan is repayable upon maturity on August 24, 2017 and may be repaid in whole or in part after August 23, 2013 without penalty.

Interest on the loan is payable annually in arrears at 4.5% per annum for the first year of the loan and thereafter at a rate equal to Canadian one-year LIBOR swap rate plus 3.14%, to be reset annually. The loan is secured by an irrevocable $25 million standby letter of credit arranged by Eastern Capital, which will be maintained until maturity of the loan.

In connection with the irrevocable letter of credit, Resverlogix has agreed to indemnify Eastern for all liabilities, costs and expenses arising from any payments made to Citibank under the letter of credit and Resverlogix has pledged its issued patents and certain tax losses and pools to Eastern as security for its obligations under the indemnity. Resverlogix also issued 1,320,000 share purchase warrants to Eastern and will pay a guarantee fee to Eastern in the amount of 0.03% per annum on the average daily aggregate principal amount of the issued and undrawn letter of credit. Each warrant is exercisable at a price of $1.58 for a period of five years. The expiry date of the warrants is August 27, 2017. Before giving effect to the transaction, Eastern Capital holds 13,200,000 shares of Resverlogix, which represents 17.8% of the 74,210,483 common shares outstanding. After giving effect to the transaction, assuming all warrants are exercised, Eastern will hold 14,520,000 shares of Resverlogix representing 19.2% of Resverlogix’s issued and outstanding common shares based on shares outstanding as at today’s date. Resverlogix is exempted from formal valuation and minority approval requirements of applicable securities laws on the basis that the fair market value of the warrants does not exceed 25% of Resverlogix’s market capitalization.

Resverlogix intends to use the net proceeds from the loan to fund research and development activities, general and administrative expenses, increased working capital and other general corporate purposes. The transaction was unanimously approved by Resverlogix’s board of directors.

“We are pleased to partner with Citibank and Eastern on this unique transaction that offers an attractive cost of capital and freedom to repay the loan in whole or in part at any time after August 23, 2013 with minimal dilution,” stated Donald McCaffrey, president and chief executive officer of Resverlogix.

Resverlogix Corp. is a clinical stage cardiovascular company with an epigenetic platform technology that modulates protein production.