Anteris Technologies Ltd (ASX:AVR) (OTCMKTS:AMEUF) (FRA:DDF) has unveiled an up to $20 million funding package to provide additional working capital as it advances the development of DurAVR™, its 3D single-piece aortic valve for the treatment of aortic stenosis.
The package from New York-based investment fund Mercer Street Global Opportunity Fund LLC includes $2.5 million, to be initially drawn down upon completion of the conditions precedent.
A primary component is a $16.5 million discretionary drawdown facility.
Unlocking potential in 2021
Mercer Street Global managing member Jonathan Juchno said: "We are excited to partner with Anteris through this crucial stage of its development and to add a promising MedTech player to our portfolio.
“We believe AVR's technology could drastically change the landscape of the aortic valve replacement market.
“We have the highest confidence in Anteris' management to unlock that potential through 2021."
Funding package details
The $20 million funding package is principally for the company’s transcatheter aortic valve replacement (TAVR) research and development, including general working capital expenses.
The facility includes:
➢ $1 million placement of new shares at an issue price equal to $3.43. This issue price is equivalent to 90% of the five-day volume-weighted average price prior to Anteris entering trading halt on 23 December 2020;
➢ $1.5 million convertible note on closing with a further $1 million convertible note available, subject to shareholder approval; and
➢ $16.5 million in a discretionary drawdown facility which will go towards further R&D expenses associated with pre-clinical and clinical trials and the regulatory process requirements.
Investment in company
Mercer Street Global Opportunity Fund will subscribe for $1 million of equity through a share placement and invest $1.5 million in convertible notes.
Additionally, subject to closing conditions, Mercer may invest in a further $1 million in convertible notes if shareholders approve this further tranche.
There is potential for Mercer to invest up to a further $16.5 million in new shares, which is also subject to either shareholder approval or the company having available placement capacity in accordance with the ASX Listing Rules.
Mercer’s initial investment, along with the $1.1 million private placement announced on December 30, 2020, and the research & development advance of $1.2 million announced on January 4, 2021, provides $4.8 million in new funds.
A binding agreement has been entered into with Mercer but completion of Mercer’s initial investment and the issue of any securities to Mercer is subject to, amongst other things,
➢ The satisfactory execution of a priority deed with respect to the security positions held by each Mercer, Mitchell Asset Management Pty Ltd and Sio Partners, LP,
➢ Execution of a general security deed by the company in favour of Mercer; and
➢ Approval of the terms of the convertible notes by ASX.
Put option
There will also be a put option agreement of up to $16.5 million, which provides the company with the ability to require Mercer to invest in new shares in the company at 90% of five-day VWAP, with each drawdown subject to satisfaction of various closing conditions and limited to 10 times the average daily number of the company’s shares traded on the ASX during a 10-day period before its exercise.
A fee of 1.5% of each drawdown is payable by the company in cash or, subject to shareholder approval, new shares at Mercer’s election.
Mercer’s stake capped
Other than in respect of the initial investment, the interest held by Mercer in fully paid ordinary shares in Anteris is capped at 4.99% unless Mercer gives written consent and in that case, its stake will not exceed 9.99% unless Mercer agrees otherwise.
This will initially limit the drawdown extent of the above facilities.
Mercer will receive 50,000 new shares at no cost for entering this agreement at the same price of the placement shares.
Additionally, Mercer will receive 150,000 options to purchase new shares in the company at an exercise price of $10, with a three-year expiry.
These shares and options will be issued using Anteris’ existing placement capacity under Listing Rule 7.1.
A further 350,000 options will be granted to Mercer on the same conditions, subject to shareholder approval.
If shareholder approval is not granted for the second tranche of options, a fee of $250,000 will instead be payable to Mercer.