Advanced Oncotherapy - Secured Convertible Note Facility & other matters
01/03/2023 14:54
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RNS Number : 5649R Advanced Oncotherapy PLC 01 March 2023
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF REGULATION
11 OF THE MARKET ABUSE (AMENDMENT) (EU EXIT) REGULATIONS 2019/310. MARKET
SOUNDINGS WERE TAKEN IN RESPECT OF THE MATTERS CONTAINED IN THIS ANNOUNCEMENT,
WITH THE RESULT THAT CERTAIN PERSONS PREVIOUSLY BECAME AWARE OF SUCH INSIDE
INFORMATION. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE
INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN AND ALL SUCH PERSONS
SHALL THEREFORE CEASE TO BE IN POSSESSION OF INSIDE INFORMATION.
1 March 2023
ADVANCED ONCOTHERAPY PLC
("Advanced Oncotherapy", "AVO" or the "Company")
New Secured Convertible Note Facility and Conversion of Prior Facility with
Warrants
Advanced Oncotherapy (AIM:AVO), the developer of LIGHT, the next-generation
proton therapy system for cancer treatment, announces that is has entered into
secured convertible loan note agreements to raise £4.975 million from new and
existing investors, as well as certain Directors (together, the "Lenders") of
the Company (the "Secured Convertible Note"). Total funds of £3.828 million
have been received from investors under the Secured Convertible Loan Note as
at the date of this announcement. The balance of funds are due to be received
shortly save for £500,000 from Michael Sinclair (Executive Chairman) due to
be received by mid March 2023.
In addition, and further to the announcement made by the Company on 18 January
2023, the Company announces that its short-term loan facility of £2.915
million provided to the Company in July 2022 by a French counterparty has been
converted to convertible notes and warrants ("Converted Loan"). The notes will
have a minimum conversion price of 25 pence. Warrants to subscribe for
1,250,000 new Ordinary Shares will also be issued on or around 3 March 2023 to
the French counterparty with an exercise price of 25 pence per share,
exercisable until 3 March 2026.
The funds raised will further strengthen the Company's balance sheet and
contribute to the funding for progressing the assembly, documentation,
verification and validation activities.
Secured Convertible Note
Key terms of the Secured Convertible Note are set out in the table below:
Maturity Date 9 months from the date of the receipt of the funds
Conversion Option to convert prior to the Maturity Date at 20% discount to the next
equity fund raising of the Company
Interest Rate Fixed interest of 1.25% per month until the earliest of the full redemption or
the conversion of the loan
Revenue share entitlement for the Harley Street machine The Operator of the Harley Street Centre shall pay to the Lenders a pro rata
portion of the revenue generated by the Proton Therapy machine which is to be
installed in Harley Street. The total revenue amount will be capped at £2.5
million per annum and the portion each Lender will receive will be calculated
on a pro rata basis according to each Lender's loan amount of the total
Secured Convertible Note. The first payment shall be made at the end of the
first full calendar year of operations of the proton centre located on Harley
Street (London, UK). An annual payment shall be made for 10 consecutive years.
Even if the Secured Convertible Note is redeemed prior to the maturity date or
converted into Ordinary Shares, the revenue share entitlement will continue
for the full 10 years.
A summary of the other material terms of the Secured Convertible Note and the
key terms of the Converted Loan is set out in the Appendix of this
announcement.
Together, these initiatives will provide immediate working capital to the
Company and support it in the execution of its broader long term financing
plans.
The funding received from the Secured Convertible Note provides the Company
with a cash runway until end of April 2023. The Company is taking steps to
raise additional financing, both dilutive and non-dilutive. These financing
options involve further possible equity financings, the quantum and timing of
which will also depend, inter alia, on the outcome and the timing regarding
the non-dilutive financing options. In the absence of additional funding the
Company will need to take steps to extend its cash runway beyond the end of
April 2023, including further cost reduction initiatives. Whilst the terms
of the Secured Convertible Note increase the cost to the Company of the
overall facility, the directors believe that the Secured Convertible Note is
the most attractive available fundraising option to the Company at the current
time and is therefore in the best interests of the Company and its
shareholders.
Director participation
Certain of the Directors (the "Participating Directors"), detailed below, will
be participating in the Secured Convertible Note on the same terms as set out
above and in the Appendix, which is deemed to be a Related Party Transaction
pursuant to AIM Rule 13.
Director Committed Participation of the Secured Convertible Note Revenue share entitlement p.a.**
Michael Sinclair* £563,000 £140,750
(Executive Chairman)
Michael Bradfield £80,000 £20,000
(Non-Executive Director)
Dr Nick Plowman £10,000 £2,500
(Non-Executive Director)
Enrico Vanni £30,000 £7,500
(Non-Executive Director)
Nicolas Serandour £10,000 £2,500
(CEO)
Prof. Stephen Myers £25,000 £6,250
(ADAM Executive Chairman)
Hans Von Celsing £10,000 £2,500
(Non-Executive Director)
*£500,000 of Michael Sinclair's participation in the Secured Convertible Note
is expected to be settled by mid-March 2023.
**Revenue share entitlement and pro rata calculations are based on £10
million being raised under the Secured Convertible Note. Should additional
funds be raised the revenue share entitlements will decrease and be based pro
rata on the higher amount raised. If less than £10 million is raised the
share entitlements will not increase.
Related party transaction disclosure
The Participating Directors are directors of AVO and therefore related parties
of the Company for the purposes of the AIM Rules for Companies ("AIM Rules").
Participation in the Secured Convertible Note by the Participating Directors
is a related party transaction under the AIM Rules. The independent Directors
(being Lori Cross and Renhua Zhang) of AVO consider, having consulted with the
Company's nominated adviser, Allenby Capital Limited, that the terms of the
participation in the Secured Convertible Note by the Participating Directors
are fair and reasonable insofar as the Company's shareholders are concerned.
Advanced Oncotherapy plc www.avoplc.com (http://www.avoplc.com/)
Dr. Michael Sinclair, Executive Chairman Tel: +44 (0) 20 3617 8728
Nicolas Serandour, CEO
Allenby Capital Limited (Nomad and Joint Broker)
Nick Athanas / Piers Shimwell (Corporate Finance) Tel: +44 (0) 20 3328 5656
Amrit Nahal / Matt Butlin (Sales & Corporate Broking)
SI Capital Ltd (Joint Broker)
Nick Emerson Tel: +44 (0) 1483 413 500
Jon Levinson Tel: +44 (0) 20 3871 4066
About Advanced Oncotherapy Plc www.avoplc.com (http://www.avoplc.com)
Advanced Oncotherapy, a UK headquartered company with offices in London,
Geneva, The Netherlands and in the USA, is a provider of particle therapy with
protons that harnesses the best in modern technology. Advanced Oncotherapy's
team "ADAM," based in Geneva, focuses on the development of a proprietary
proton accelerator called, Linac Image Guided Hadron Technology (LIGHT).
LIGHT's compact configuration delivers proton beams in a way that facilitates
greater precision and electronic control.
Advanced Oncotherapy will offer healthcare providers affordable systems that
will enable them to treat cancer with innovative technology as well as
expected lower treatment-related side effects.
Advanced Oncotherapy continually monitors the market for any emerging
improvements in delivering proton therapy and actively seeks working
relationships with providers of these innovative technologies. Through these
relationships, the Company will remain the prime provider of an innovative and
cost-effective system for particle therapy with protons.
Appendix
Secured Convertible Note
Financing instrument Secured interest-bearing convertible facility
Principal Up to £15 million
Maturity Date 9 months from the date of the receipt of the funds
Conversion Option to convert prior to the Maturity Date at 20% discount to the next
equity fund raising of the Company
Interest Rate Fixed interest of 1.25% per month until the earliest of the full redemption or
the conversion of the loan
Revenue share entitlement for the Harley Street machine The Operator of the Harley Street Centre shall pay to the Lenders a pro rata
portion of the revenue the Operator will receive from the Proton Therapy
machine which is to be installed in Harley Street. The total revenue amount
will be capped at £2.5 million per annum and the portion each Lender will
receive will be calculated on a pro rata basis according to each Lender's loan
amount of the total Secured Convertible Note. The first payment shall be made
at the end of the first full calendar year of operations of the proton centre
located on Harley Street (London, UK). An annual payment shall be made for 10
consecutive years. Even if the Secured Convertible Note is redeemed prior to
the maturity date or converted into Ordinary Shares, the revenue share
entitlement will continue for the full 10 years.
Security Secured against the same assets as the existing facilities in place with
Nerano Pharma Ltd, on a pari passu basis, such as the LIGHT components being
built in Daresbury and Geneva, associated intellectual property and the
property at Harley St.
Assignment and transfer by the Lender All transfers and assignments are subject to the Lender receiving the
Company's prior consent not to be unreasonably withheld. Such proposed
transfer or assignment will not be permitted when the proposed transferee or
assignee is a person whose principal business or material activity is
investing in distressed debt or the purchase of loans or other debt securities
with the intention of (or view to) owning the equity (loan to own) or gaining
control of a business or exploiting holdout or blocking positions.
AOB · In the event other investors wish to subscribe to this
instrument, up to a maximum aggregated amount of £15 million, within 60 days
of the date of the agreement, those investors would benefit from the same
terms as detailed above, notably in relation to the interest rate and (on a
pro rata basis) the security package and revenue share entitlement.
· Any subscription under the Secured Convertible Note is subject to
the consent of the Lenders and Nerano Pharma Ltd ("Nerano") and disclosure to
the Lenders and Nerano of the identity of such new subscriber.
Converted Loan
Financing instrument Convertible Bond program with attached warrants
Conversion Amount GBP 2,915,000
Convertible Notes 583 notes, each with a value of GBP 5,000, which may be converted into
ordinary shares of 25 pence each
Maturity Date 6 February 2025
Conversion Price Equal to the higher of the nominal value of the Company's shares (£0.25) or
90% of the lowest daily VWAP during the 15 trading days preceding issue of a
conversion notice.
Conversion Fee If the Company's mid-market share price is trading below its nominal share
price, the Company shall pay the French counterparty a conversion fee
calculated to compensate for the difference, which may be settled in the
Company's ordinary shares of 25 pence each ("Ordinary Shares") or cash.
If the Conversion Fee is to be paid in cash, it will be calculated as the
difference in value between the conversion price and the nominal value
multiplied by the closing share price on the conversion date. If the
Conversion Fee is to be paid in Ordinary Shares, it will be calculated as the
difference in value between the conversion price and the nominal value
multiplied by the closing share price on the conversion date and the multiple
of the nominal value over the lowest closing share price during the period of
the conversion date to the date before the transfer of the Ordinary Shares
Warrants Warrants to subscribe for 1,250,000 new Ordinary Shares will also be issued on
or around 3 March 2023 to the counterparty with an exercise price of 25 pence
per share, exercisable until 3 March 2026.
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