0001251769FALSE00012517692021-12-212021-12-21
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
December 21, 2021
Apollo Endosurgery, Inc.
(Exact name of registrant as specified in its charter)
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Delaware |
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001-35706
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16-1630142
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(State or other jurisdiction of incorporation) |
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(Commission File Number) |
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(IRS Employer Identification No.) |
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1120 S. Capital of Texas Highway
Building 1, Suite #300
Austin, Texas 78746
(Address of principal executive offices) (Zip Code)
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(512) 279-5100
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligations of the registrant
under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the
Act:
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Common stock, $0.001 par value per share |
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APEN |
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The Nasdaq Global Market |
Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933 (§
230.405 of this chapter) or Rule 12b-2 of the Securities Exchange
Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act.
Item 1.01 Entry into a Material Definitive
Agreement.
On December 21, 2021, Apollo Endosurgery, Inc. entered into a Loan
and Security Agreement, or the Loan Agreement, by and among
Innovatus Life Sciences Lending Fund I, LP, or Innovatus, as
collateral agent, the lenders listed on Schedule 1.1 thereto,
referred to collectively as the Lenders, and certain of our
subsidiaries, as co-borrowers, referred to collectively as the
Borrowers. Under the Loan Agreement, Innovatus has agreed to make
certain term loans to us and the Borrowers of up to $100 million.
We and the Borrowers drew the Term A Loan of $35 million on
December 21, 2021, which was used to repay existing
indebtedness, as described further below. We and the Borrowers will
be eligible to draw the Term B Loan of $15 million between July 1,
2023 and December 31, 2023 and the Term C Loan of $25 million
between July 1, 2024 and December 31, 2024, in each case upon the
achievement of certain minimum revenue thresholds. We and the
Borrowers will be eligible to draw the Term D Loan of $25 million
to finance certain approved acquisitions between June 30, 2022 and
June 30, 2024. We refer to the term loans collectively as the Term
Loans.
The obligations under the Loan Agreement are secured by a perfected
security interest in all of our and the Borrowers’ assets except
for certain customary excluded property.
The interest rate applicable to outstanding borrowings is equal to
the sum of (a) the greater of (i) the Prime Rate or (ii) 3.25% plus
(b) 4.00% per annum. The Term Loans are interest only from
December 21, 2021 through February 1, 2027, after which we and
the Borrowers are required to pay equal monthly installments of
principal through December 21, 2027, the maturity
date.
Prior to December 21, 2025, the Lenders may elect to convert up to
10.00% of the then-outstanding aggregate principal amount of the
Term Loans into shares of our common stock at a fixed conversion
price per share of $11.50. This conversion right may only be
exercised once by the Lenders. Under certain circumstances, the
Lenders may require us to file a registration statement under the
Securities Act of 1933, as amended, to register their shares of
common stock for resale.
On the funding date of each Term Loan, a facility fee equal to
1.00% of the applicable Term Loan is payable to the Lenders. Prior
to December 21, 2022, the Term Loans may only be prepaid in
full upon a change in control of our company, with payment of 3.00%
prepayment premium. After December 21, 2022, the Term Loans may be
prepaid in full through December 21, 2023 with payment of a 2.00%
prepayment premium, thereafter through December 21, 2024 with
payment of a 1.00% prepayment premium, and thereafter with no
prepayment premium. Certain non-utilization fees are payable on the
Term B Loan and the Term C Loan subject to the terms and conditions
set forth in the Loan Agreement. An additional final payment of
4.00% of the amount of Terms Loans advanced (and not converted) by
the Lenders will be due upon prepayment or repayment of the Term
Loans in full.
The Loan Agreement contains customary representations and
warranties and customary affirmative and negative covenants,
including, among other things, restrictions on indebtedness, liens,
investments, mergers, dispositions, prepayment of other
indebtedness and dividends and other distributions. The Loan
Agreement also contains a minimum liquidity covenant, tested on a
maintenance basis, and a minimum revenue covenant, tested quarterly
commencing the earlier of (a) December 31, 2023 and (b) the funding
date of the Term B Loan.
The Loan Agreement also includes customary events of default,
including failure to pay principal, interest or certain other
amounts when due, material inaccuracy of representations and
warranties, violation of covenants, specified cross-default and
cross-acceleration to other material indebtedness, certain
bankruptcy and insolvency events, certain undischarged judgments,
material invalidity of guarantees or grant of security interest,
material adverse change and change of control, in certain cases
subject to certain thresholds and grace periods. If one or more
events of default occurs and continues beyond any applicable cure
period, Innovatus may, with the consent of the Lenders holding a
majority of the loans and commitments under the facilities, or
will, at the request of such Lenders, terminate the commitments of
the Lenders to make further loans and declare all of the
obligations of us and the Borrowers under the Loan Agreement to be
immediately due and payable.
The foregoing description of the Loan Agreement is not intended to
be complete and is qualified in its entirety by reference to the
Loan Agreement, a copy of which will be filed as an exhibit to our
Annual Report on Form 10-K for the year ended December 31,
2021.
Item 1.02 Termination of a Material
Definitive Agreement.
Concurrently with our entry into the Loan Agreement, we used the
proceeds from borrowings under the Term A Loan as well as cash on
hand to prepay in full all outstanding obligations under, and
terminated, the Loan and Security Agreement, dated March 15, 2019
and as amended from time to time, with Solar Capital Ltd., or the
Solar Term Loan Facility. For a description of the Solar Term Loan
Facility, refer to Note 9 to our audited consolidated financial
statements included in our
Annual Report on Form 10-K for the year ended December 31,
2020,
as supplemented by Note 8 to our unaudited consolidated financial
statements included in our
Quarterly Report on Form 10-Q for the quarter ended September 30,
2021,
as well as the
descriptions of the Solar Term Loan Facility under the caption
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations—Liquidity and Capital Resources—Term Loan
Facility” in each report.
In connection with this prepayment, we paid a total of
approximately $38.5 million, which consisted of (i) the remaining
principal amount outstanding of $35 million, (ii) a prepayment
premium and final fee of $3.15 million, (iii) approximately
$180,000 of accrued and unpaid interest, and (iv) the remainder for
transaction expenses. There were no material relationships between
the us or our affiliates and the other parties to the Solar Term
Loan Facility other than in respect of such agreement.
Notwithstanding the termination of the Solar Term Loan Facility, we
remain obligated to pay an exit fee of approximately $1.9 million
upon the earlier to occur of (i) certain exit events specified in
the Solar Term Loan Facility or (ii) our achievement of trailing
twelve-month revenue of $100 million. If none of these events
occurs before December 4, 2030, the obligation to pay the exit fee
will terminate.
Item 2.03 Creation of a Direct Financial
Obligation or an Obligation under an Off-Balance Sheet Arrangement
of a Registrant.
The information set forth under Item 1.01 of this report is
incorporated by reference into this Item 2.03.
Item 3.03 Material Modification to the
Rights of Security Holders.
The Loan Agreement imposes restrictions on our ability to declare
and pay dividends or make other distributions to holders of our
capital stock.
Item 7.01 Regulation FD
Disclosure.
On December 21, 2021, we issued a press release announcing,
among other things, our entry into the Loan Agreement and repayment
of amounts under the Solar Term Loan Facility, which press release
is attached as Exhibit 99.1 to this Current Report on Form
8-K.
The press release attached to this report as Exhibit 99.1 is
furnished and shall not be deemed “filed” for purposes of Section
18 of the Securities Exchange Act of 1934, as amended, or subject
to the liabilities of that section. The information contained in
the press release attached to this report as Exhibit 99.1 shall not
be deemed incorporated by reference into any other filing with the
Securities and Exchange Commission made by us, whether made before
or after the date hereof, regardless of any general incorporation
language in such filing.
Item 9.01 Financial Statements and
Exhibits.
(d) Exhibits
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Exhibit No. |
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Description of Document
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99.1 |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL
document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly
authorized.
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APOLLO ENDOSURGERY, INC. |
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Dated: |
December 21, 2021 |
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By: |
/s/ Jeffrey Black
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Name: |
Jeffrey Black
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Title: |
Chief Financial Officer |
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