Rock Creek gets default notice for convertibles held by Hudson Bay

Company also gets default note regarding Alto Opportunity convertible

By Devika Patel

Knoxville, Tenn., Aug. 29 – Rock Creek Pharmaceuticals, Inc. received two default notices regarding its senior secured convertible notes from Hudson Bay Master Fund Ltd. and from Tenor Capital Management, on behalf of Alto Opportunity Master Fund, SPC, on Aug. 24, according to an 8-K filed Monday with the Securities and Exchange Commission. The notes were sold in an October 2015 private placement.

The default notice for the Hudson Bay notes stated that Hudson Bay was permitted to withdraw $6,664,188.87 from its holder master restricted account, which it did, leaving a balance of $200,000 in the account.

Hudson elected to redeem $3,835,972.13 of the conversion amount outstanding under the note at the default redemption price of $6,664,188.87 and to apply the collateral withdrawn in satisfaction in full of the cash payment obligation. After the redemption, Hudson Bay retains a $6,996,8709 note.

The default notice from Tenor alleged that the company would not be able to comply with conversion requests and that the company was not in compliance with financial covenants.

Tenor exercised its right to accelerate the note and has demanded payment of $7,322,815, which it claims the company owes under the note. As partial payment, Tenor has withdrawn the entire balance of $3,517,255.56 from the Tenor master restricted account and has demanded the balance of $3,805,559.68 be paid in cash by Aug. 31.

The company said it plans a reverse split and has been seeking additional funding from other sources. It is exploring all options, including initiating bankruptcy or insolvency proceedings.

The pharmaceutical company is based in Sarasota, Fla.

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