Pharming announces refinancing of its existing debt by a single US$100 million debt facility on improved commercial terms
Repayment of amortising convertible bonds eliminates risk of approximately 24% dilution
Leiden, The Netherlands, 16 May 2017: Pharming Group N.V. (“Pharming” or “the Company”) (Euronext Amsterdam: PHARM) announces that it has completed a new US$100 million finance agreement with Orbimed Advisors. This has been used to redeem the Amortizing Convertible Bonds due 2017/2018, and to refinance the Company’s senior debt facility with Silicon Valley Bank and Kreos Capital, together with the associated prepayment fees and the legal and other costs of the transaction. The loan, initially structured as a bridge facility will be replaced within 60 days by a full loan agreement with a maturity date of June 2021 under similar terms and conditions as described below.
Highlights
? New four year $100m (€91.7 million) Senior Secured Debt facility to refinance debt on more favourable terms to redeem a total of €35.9 million (US$39.1 million) of Amortising Convertible Bonds and refinance US$40 million of Senior Debt. The other terms of the new facility are not being disclosed
? Net effect: o Release of 124.2 million shares reserved against the Amortizing Convertible Bonds, minus just under 9.2 million warrants for Orbimed, eliminates risk of approximately 24% current dilution effect for existing shareholders o Significant reduction of near term cash burn (from amortisations and debt repayments) of approximately €16 million in 2017 and almost €8 million in 2018, which will allow for investment in RUCONEST® commercialisation and pipeline development
? Existing €11.8 million 5 year (December 2021) 8.5% Ordinary Convertible Bonds are unaffected by this transaction.
? No significant effect on Company’s cash balance at present, which stands at €33 million.
Dr Sijmen de Vries, CEO of Pharming, commented:
“We are delighted to announce that we have been able to improve the December 2016 funding of our RUCONEST® commercial rights acquisition further by refinancing the Senior Debt and redeeming the Amortizing Convertible Bonds on such excellent terms. Orbimed Advisors is one of the world’s leading specialty debt investors in the life science sector, and we are very pleased to have them as a long term partner.
2
This new refinance enables us to remove from the market the likelihood of issue of a substantial part of our authorized share capital (124 million shares) that was tied to the Amortising Convertible Bonds facility. With a conversion price of €0.289, these Bonds might otherwise have been converted into shares at significant discount to the current market price.
The net effect on the Company’s balance sheet is significant. We will not be required to make repayments over the next 12 months of almost €3 million per month in cash (or in shares at a discount) on the Amortizing Convertible Bonds, nor to make repayments of almost €1 million per month on the senior debt from December this year until October of next year. This allows us to invest our cash into promoting RUCONEST® and developing our pipeline and facilities, thereby enhancing growth opportunities.
This is, therefore, another excellent day for our existing shareholders. We would like to thank our previous lenders, Kreos Capital and Silicon Valley Bank, and the holders of the Amortizing Convertible Bonds, who, by backing us in December 2016, enabled the Company to make the transformational acquisition of the North American commercial rights for RUCONEST®.”
Capital Summary
Numbers of Shares:
Prior to the Transaction
Transaction
Today
Issued share capital (shares) Reserved for: Share Option Schemes Investor Warrants Convertible Bonds: - Amortizing - Ordinary (€11.8 million)
Fully Diluted Shares
484,583,475 54,623,675 92,228,283
124,207,613 41,443,662
797,086,708
- - 9,174,372
(124,207,613) -
(115,033,241)
484,583,475
54,623,675 101,402,655
- 41,443,662
682,053,467
Authorized Share Capital (shares) Headroom available for issue
800,000,000 2,913,292
115,033,241
800,000,000 117,946,533
% Capital available for use
0.4%
14.7%
Further details
New Debt Facility ? The Company has signed an agreement with Orbimed Advisors (the Lender) for a US$100 million (€91.7 million), four year debt facility on improved commercial terms. The overall interest rate is approximately 12%, reducing to 11% if the Company achieves net sales in the USA of US$100 million during the term of the loan.
3
? The loan has been used to redeem the current Amortizing Convertible Bonds due 2017/2018, in an amount of €44.9 million including early repayment fees, and also to refinance the existing senior debt facility in an amount of €43.3 million including early repayment fees. ? As a result of the retirement of the Amortizing Bonds, the 124.2 million shares which were reserved against conversion of the remaining Amortizing Bonds, are no longer reserved for that purpose, and returned to treasury. Net of the shares which will be reserved for the warrants, this is a total of 115.0 million shares (approximately 24% of the issued share capital). The Company has no plans to issue these shares at this time. ? Also as a result of this transaction, the Company’s cash burn will be reduced by the likely amount of cash repayments under the Amortizing Convertible Bonds in the rest of 2017 and in 2018, plus the amount of the cash repayments on the senior debt facility which start in December 2017 and continue through most of the loan period. The net effect in 2017 is expected to be €16.5 million, and the net effect in 2018 is expected to be €7.7 million. This excludes the effects on the Company of any repayments of the Amortizing Convertible Bonds which might have been made in shares.
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