EpiCept Obtains New $10.6 Million Secured Debt Financing; Prepays Outstanding Convertible Notes
TARRYTOWN, N.Y., May 31, 2011 (BUSINESS WIRE) -- Regulatory News:
EpiCept Corporation (nasdaq and nasdaq omx stockholm exchange:EPCT) today announced that it has completed a $10.6 million 11.5% senior secured term loan facility with MidCap Financial LLC. The funds will be used for working capital purposes including the development of the Company's research and development pipeline and to prepay in full the $500,000 outstanding balance of the Company's 7.556% Convertible Notes due 2014.
"This loan is the first tangible result of our effort, announced several months ago, to obtain non-equity financing secured by the Company's intellectual property or other assets, which we believe represents our most attractive source of incremental cash," stated Jack Tally, EpiCept's President and Chief Executive Officer. "We are continuing our efforts to obtain additional, non-dilutive financing, as we have outlined in earlier communications, with a view towards securing cash sufficient to fund our operations beyond 2012."
EpiCept drew at closing $8.6 million of the facility for its operations and to make the debt prepayment. The $2 million balance of the facility is available until December 31, 2011 upon meeting certain conditions, including the commencement of a Phase III clinical trial. The facility has a scheduled final maturity of May 27, 2014.
In connection with the term loan, the Company granted to MidCap Financial five-year warrants to purchase approximately 1.1 million shares of the Company's common stock at $0.63 per share. Warrants to purchase an additional $160,000 of the Company's common stock will be issuable when the $2 million balance of the facility is drawn. The number of shares and exercise price of the additional warrants will be based on the market price of the Company's stock at the time of the drawing.
About Midcap Financial LLC
MidCap Financial is a commercial finance company focused on middle market lending in healthcare and other specialty vertical markets. MidCap specializes in middle market loans in the $10 million to $200 million range. Its principal officers are all veterans of the healthcare finance industry, having worked together at three healthcare finance companies previously. The company is headquartered in Bethesda, MD, with offices in Chicago and Los Angeles. More information can be found at www.midcapfinancial.com .