Zila seeks to restructure 12% convertibles

By Devika Patel

Knoxville, Tenn., March 18 - Zila, Inc. announced that it has retained financial and legal advisers to assist in restructuring its $12 million of senior secured convertible notes.

If the company is unable to obtain a solution to its debt, it likely will be forced to file for Chapter 11 protection.

The company said it has made timely interest payments on the notes, except for the Jan. 31 interest payment, which has not been made. The company was unable to issue shares for this payment because the stock issue would have required shareholder approval.

In addition, given the company's current level of cash and cash equivalents and the impact of the global economic downturn on its business, the company may not have sufficient cash available to pay the notes' future quarterly interest payments, which would constitute a default.

As a result of the technical default and sales declines, the company has substantial doubt about its ability to continue.

"In order to continue as an ongoing business and fund our operations over the next 12 months, we will require additional funds and need to restructure our senior secured convertible notes," chairman and chief executive officer David Bethune said in a press release.

"We have had discussions with a number of potential investors, all of whom have required, as a condition of their investment, that the senior secured convertible notes be repaid from the funds provided by the investor(s) and that this repayment be at a substantial discount from the $12 million principal outstanding to reflect what they believe to be the current market value of those notes."

Phoenix-based Zila is a cancer diagnostic company focused on developing technologies to detect oral cancer.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.