Merrion Pharmaceuticals sells $5 million 12.45% debt owed to Hercules

Irelandia Investments takes on debt, reduces interest rate to 7.5%

By Devika Patel

Knoxville, Tenn., Feb. 3 - Merrion Pharmaceuticals plc said it arranged to transfer a $5 million 12.45% debt owed to Hercules Technology Growth Capital, Inc. to Irelandia Investments.

The company had planned to conduct a €2.5 million equity funding to pay off the debt, which had been a "significant burden on the company's expected cash outflows," but instead opted to transfer the debt to Irelandia. This will enable Merrion to begin restoring its financial flexibility without immediate dilution for shareholders through a modification of the terms of the Hercules debt.

Following the transfer, Irelandia has agreed to amend the Hercules loan. Among other changes, the interest rate will be reduced to 7.5% from 12.45%; the monthly interest payments, which were to commence in February, have been deferred to December 2014; the principal repayments, which were to begin in July, were deferred to a single end-of-term "bullet" payment in December 2014; and the cash covenants were removed, as well as the requirement to raise a further €1.5 million by June 2012.

The specialty pharmaceutical firm is based in Dublin.

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