Integrated BioPharma negotiates forbearance for $7.81 million 8% notes

Company won't pay off $4.5 million convertible until 8% notes are paid

By Devika Patel

Knoxville, Tenn., Oct. 11 - Integrated BioPharma, Inc. arranged a forbearance agreement with holders of its $7.81 million of 8% senior secured notes on Oct. 4, according to an 8-K filed Tuesday with the Securities and Exchange Commission. Imperium Advisers, LLC is the collateral agent for the notes, which were issued on Feb. 21, 2008.

The notes matured on Nov. 15, 2009 and the company failed to repay the balance due at maturity, which resulted in a default under the notes. As a result, the holders had the right to accelerate the notes, which are secured by substantially all of the company's assets.

Under the forbearance agreement, which will expire on Dec 31, Imperium Advisers may sell the 1,266,706 shares of common stock the company pledged to the noteholders and apply the proceeds from the sale against the notes' unpaid principal and to other obligations under the notes.

The company also agreed to refrain from making principal payments on a $4.5 million convertible note held by CD Financial, LLC, which matured on Feb. 21, until it has paid off the 8% notes in full. Likewise, it agreed to refrain from making lease or rental payments that are overdue until it has paid off the 8% notes.

If Integrated BioPharma is unable to pay off the notes by the end of the agreement's term, it will pay the noteholders a $1 million fee, which is in addition to other amounts owed to the investors.

The company also agreed to hire an investment banker by Oct. 19 to help it sell off some of its assets, including its nutraceutical product line.

Integrated BioPharma is a pharmaceutical company based in Hillside, N.J.

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