Deal sells 7% senior amortizing notes along with 30% warrant coverage
By Devika Patel
Knoxville, Tenn., Nov. 5 – EnteroMedics Inc. arranged a $25 million registered direct offering of 7% senior amortizing convertible notes on Nov. 4, according to an 8-K filed Thursday with the Securities and Exchange Commission. Northland Securities, Inc. is the agent.
The notes mature in two years and are convertible into common stock at $0.29 per share. The conversion price is a 3.33% discount to the Nov. 3 closing share price of $0.30.
The investors also will receive 30% warrant coverage. Each five-year warrant is exercisable at $0.31, a 3.33% premium to the Nov. 3 closing share price.
The first of three closings will be on Nov. 9. At the first closing, the buyers will purchase $1.5 million principal amount of notes.
The company will make amortization payments on the notes in stock or cash, at its option, on the last trading day of each month beginning Dec. 31.
Proceeds will be used for commercialization efforts for the Maestro Rechargeable System, clinical and product development activities and other working capital and general corporate purposes.
St. Paul, Minn.-based EnteroMedics develops implantable systems for the treatment of obesity and other gastrointestinal disorders.
| Issuer: | EnteroMedics Inc.
|
| Issue: | Senior amortizing convertible notes
|
| Amount: | $25 million
|
| Maturity: | Two years
|
| Coupon: | 7%
|
| Conversion price: | $0.29
|
| Warrants: | 30% coverage
|
| Warrant expiration: | Five years
|
| Warrant strike price: | $0.31
|
| Agent: | Northland Securities, Inc.
|
| Pricing date: | Nov. 4
|
| Settlement date: | Nov. 9 (for $1.5 million)
|
| Stock symbol: | Nasdaq: ETRM
|
| Stock price: | $0.30 at close Nov. 3
|
| Market capitalization: | $20.75 million
|
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