Theratechnologies, a biopharmaceutical company focused on the development and commercialization of innovative therapies, reached an agreement in principle to amend some of the terms and conditions of its credit agreement dated July 20, 2022, as amended from time to time, with certain funds and accounts for which Marathon Asset Management, acts as investment manager.
The company and Marathon agreed in principle to make the following amendments to the terms and conditions of the loan facility:
To remove the obligation to maintain at all times liquidity in the amount of $30 million if the F8 formulation of tesamorelin is not approved by the United States Food and Drug Administration (FDA) by March 31, 2024
To decrease the minimum liquidity requirements over time to a minimum of $15 million from US$20 million based on targeted last twelve months adjusted EBITDA
To move to an adjusted EBITDA-based target from a quarterly revenue-based target beginning with the quarter ending Nov. 30, 2023
To delete from the loan facility the prohibition for the company to have a going concern explanatory paragraph in the annual report of the independent registered public accounting firm of the company.
In consideration of the proposed amendments, the company has agreed to pay an amount equal to $600,000, or 100 basis points calculated on the funded debt as of this day ($60 million), over the term of the loan and added to the outstanding loan as payment in kind, and reprice the exercise price of the common share purchase warrants held by Marathon to $2.30 per share from $5.80 per share. Following the share consolidation completed on July 31, 2023, the exercise of four warrants is required to purchase 1 common share of Theratechnologies, resulting in a maximum issuance of 1,250,000 common shares. The warrants can be exercised until Feb. 27, 2030.
The repricing of the warrants is conditional upon the approval of the Toronto Stock Exchange and the final terms of these amendments, including the definition of “adjusted EBITDA”, remain subject to the completion of all the legal documentation to the satisfaction of both the company and Marathon.
The amendments to the loan facility are expected to be executed on or about Oct. 10, 2023.
