Deal sells 7% senior amortizing notes along with 30% warrant coverage
By Devika Patel
Knoxville, Tenn., Jan. 13 – EnteroMedics Inc. raised $11 million in the second tranche of a $25 million registered direct offering of 7% senior amortizing convertible notes on Jan. 11, according to an 8-K filed Wednesday with the Securities and Exchange Commission. Northland Securities, Inc. is the agent for the deal, which priced on Nov. 5 and raised $1.5 million on Nov. 9.
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 from the first tranche is exercisable at $0.31, a 3.33% premium to the Nov. 3 closing share price.
In the first closing, the buyers bought $1.5 million of notes and warrants for 1,762,862 shares. In the second tranche, investors bought $11 million notes and warrants for 861,842 shares.
The second-tranche warrants are exercisable at $4.65 for five years. The strike price is a 232.14% premium to the Jan. 7 closing share price of $1.40, which takes into account the company’s 1-for-15 reverse stock split on Jan. 6.
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, $4.65
|
| Agent: | Northland Securities, Inc.
|
| Pricing date: | Nov. 4
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| Settlement dates: | Nov. 9 (for $1.5 million), Jan. 11 (for $11 million)
|
| Stock symbol: | Nasdaq: ETRM
|
| Stock price: | $0.30 at close Nov. 3, $1.40 on Jan. 7 after Jan. 6 1-for-15 reverse stock split
|
| Market capitalization: | $145.03 million
|
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