New Issue: Viragen sells $20 million convertible plus warrants in private placement

By Ronda Fears

Nashville, April 5 - Viragen Inc. announced the sale of $20 million in convertible notes and stock purchase warrants in a private placement with institutional investors.

The proceeds have been placed in escrow pending receipt of stockholder approval for the sale, as well as for a reverse 1-for-10 split of common stock. The company plans to ultimately use proceeds for research, development, and commercialization of its portfolio of healthcare products and technologies, including seeking FDA approval for Multiferon, a natural human alpha interferon.

Interest on the escrowed funds will be at the rate of 10% per annum until stockholders approve the sale and reverse stock split, after which the interest rate on the escrowed funds will drop to 7%. The conversion price is subject to adjustment depending on the stock price following the reverse split.

Warrant coverage will be 120% of the conversion price.

"This significant investment in Viragen would provide us with the financial flexibility and strength necessary to support organizational growth as we move forward with our mission to build stockholder value," said Viragen chairman Carl Singer, in a news release.

"With longer-term secured funding, a capital restructuring and the advent of expected commercial and scientific milestone achievements, we believe that the company will be better positioned to create stockholder value."

With the sale proceeds, chief financial officer Dennis Healey, in the news release, said the company will have about $27 million in working capital on hand.

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