Great Basin Secures $75 Million Funding Commitment in Senior Convertible Notes
30 June 2016 - 7:00AM
Business Wire
$68MM in cash proceeds to fund operations from
2017 to mid-2018
Great Basin Scientific, Inc. (NASDAQ:GBSN), a molecular
diagnostics company, today announced it has entered into a
securities purchase agreement with institutional investors to issue
$75 million of senior convertible notes (the “Notes”) and related
common stock purchase warrants. The transaction will be structured
as Original Issue Discount (“OID”) convertible notes, with the
Company receiving $68M in cash proceeds and no additional interest
accruing during the duration of the Notes.
Under the terms of the senior convertible note agreement, $6
million in proceeds will be unrestricted and immediately available
for use by the Company. The remaining $62MM will be held in a
control account of the Company and will be disbursed in 15
contractually set monthly disbursements beginning in February 2017,
subject to certain equity conditions and a shareholder vote. The
transaction is expected to close on or around June 30, 2016.
Because the funds from this transaction are largely deferred until
2017 the Company anticipates it will raise additional capital in
the fall of 2016.
“This is a transformative transaction for Great Basin, one we
believe can take us to our long-standing internal goal of
profitability in 2018,” said Ryan Ashton, co-founder and chief
executive officer of Great Basin. “We ended the first quarter of
2016 with 222 customers, two commercially available tests and
another two tests FDA-cleared. With these funds we expect to expand
our product menu to nine commercially available tests, creating the
potential for substantially increased revenue per customer. The
financing also provides the resources to support our efforts to hit
our previously announced customer targets of 300-325 to end 2016
and 500-550 customers to end 2017 and we believe we can expect to
have 700 customers mid-July 2018. Depending on a number of
factors—including new test take-up rates and average customer
testing volumes—we believe this transaction, combined with the
anticipated Fall 2016 financing, may be adequate to achieve
profitability.”
“We appreciate the continued support of our institutional
investors,” said Jeff Rona, chief financial officer of Great Basin.
“We value the vote of confidence we believe this financing
represents. These institutions have supported us for some time and
have seen the Company’s consistent delivery on our customer and
menu expansion targets, and recognize the enormous opportunity
Great Basin has ahead.”
Roth Capital Partners acted as sole placement agent for the
offering.
Additional Transaction Details
Six months after close of this transaction and receipt of
shareholder approval, the Notes will be convertible into the
Company’s common stock at a conversion price of at $2.00 (the
Original Conversion Price) into a fixed number of shares.
Seven months after close of this transaction and receipt of
shareholder approval, the Notes will amortize on a straight-line
basis over 18 months. The Notes’ principal may be repaid, at the
Company’s election, in either cash (including restricted cash) or,
subject to certain conditions, shares of the Company’s common stock
at an installment conversion price of a discount to the
then-current market price, if below the Original Conversion
Price.
In addition to the Notes, the Company will issue common stock
purchase warrants equal to 150 percent of the number of shares of
common stock the institutional investor would receive if the Notes
were converted in full at the Original Conversion Price. Each
warrant will become exercisable upon issuance, and will allow the
warrant holder to acquire one additional share of common stock of
the Company at a price of $2.08. The warrants expire 60 months from
the date of issuance.
The Notes, warrants and shares of common stock issuable upon
conversion or exercise thereof have not been registered under the
Securities Act or any applicable state securities laws and may not
be offered or sold absent such registration or pursuant to an
available exemption from such registration requirements. This press
release does not constitute an offer to sell or the solicitation of
an offer to buy any of the securities nor shall there be any sale
of any of the securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful.
For additional information concerning the details of the
financing, please refer to the Form 8-K the Company will file with
the Securities and Exchange Commission.
About Great Basin Scientific
Great Basin Scientific is a molecular diagnostics company that
commercializes breakthrough chip-based technologies. The Company is
dedicated to the development of simple, yet powerful,
sample-to-result technology and products that provide fast,
multiple-pathogen diagnoses of infectious diseases.
Forward-Looking Statements
This press release includes forward-looking statement regarding
the closing of the initial tranche, issuance of the Notes and
warrants, receipt of proceeds upon the closing of future tranches,
stockholder approval of the issuance of additional shares, the
intended use of proceeds, roll out of the GB550 analyzer, the
Company’s need and timing for future financing, the Company’s
anticipated customer growth, timing and launch of planned clinical
trials, expected timeline for new commercialized tests, potential
FDA approval of anticipated new tests, potential profitability in
the future, continued support from the Company’s institutional
investors, and other similar statements. Forward-looking statements
involve risk and uncertainties, which could cause actual results to
differ materially, and reported results should not be considered as
an indication of future performance. These risk and uncertainties
include, but are not limited to: (i) our limited operating history
and history of losses; (ii) our ability to develop and
commercialize new products and the timing of commercialization;
(iii) our ability to obtain capital when needed; and (iv) other
risks set forth in the Company’s filings with the Securities and
Exchange Commission, including the risks set forth in the company’s
Annual Report on Form 10-K for the fiscal year ended December 31,
2015 and the company’s Quarterly Report on Form 10-Q for the
quarter ended March 31, 2016. These forward-looking statements
speak only as of the date hereof and Great Basin Scientific
specifically disclaims any obligation to update these
forward-looking statements, except as required by law.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160629006446/en/
Media:ICRKate Ottavio Kent,
203.682.8276Kate.Ottavio-Kent@icrinc.comorInvestor
Relations:CorProminenceScott Gordon,
516.222.2560gbinfo@corprominence.comorICRDavid Clair,
646.277.1266david.clair@icrinc.com