RNS & Investor News

Realignment of Bond Repayments

06 July 2020

Collagen Solutions plc (AIM: COS), the developer and manufacturer of biomaterials and regenerative medicines for the enhancement and extension of human life, announces it has entered into a deed of variation in relation to its existing Bond Subscription Agreement with Norgine Ventures. This variation provides for a reduction in capital repayments and a delay to the final repayments to Norgine Ventures which will improve the Company’s financial position.

Consistent with its desire to maximise cash to support ongoing business operations, the Company has agreed an amendment to the timing of principal repayments on Tranche A and Tranche B Bonds issued to Norgine Ventures. The variation provides for a reduction in the capital payments from 1 July 2020 and delays the balloon payments on the redemption of the bonds by either three or six months from 30 September 2020 for Tranche A, and 31 January 2021 for Tranche B. The exact timing of the delay to repayments (three or six months) depends on the delivery of specific commercial milestones, for which the Company has confidence and visibility based on its existing customer base and contracted milestones. Prior to this agreement, the Company remains in compliance with all payment schedules and as of 30 June 2020 will have repaid a total of £1.96 million in principal against the total £3 million drawn.

As part of this process, the Company and Norgine Ventures have also agreed to mitigate the impact on David Evans, former chairman of the Company, of the call option held by Norgine Ventures over a number of David Evans shares. This call option arrangement (disclosed at the time of the 2017 and 2019 fundraises) was deemed necessary at the time but is a personal commitment taken on by David Evans on behalf of the Company. It allows Norgine Ventures to call for up to 20 million shares in the Company held by David Evans in the event the Company raises money below a certain price. In relation to shares of David Evans that are subject to the call option by virtue of the price of the 2019 fundraise (five pence), the parties have agreed to a payment at the end of the loan period in lieu of a transfer of shares under the call option. This will be paid in whole by David Evans in the event of a sale of the Company prior to termination of the loan or the cost will be shared equally between the Company and David in the event of termination of the loan prior to a sale. The liability of the Company in such instance is limited and not considered material. In addition, in the event only of a further fundraise at a price lower than five pence, David Evans will have the option[1] to subscribe for such number of shares at five pence as will allow the Company to repay the loan, thereby avoiding additional shares of David becoming subject to the call option and reducing the dilution of such a fundraising to the Company. As David Evans was a Director of the Company within the last 12 months, this arrangement would constitute a related party transaction under the AIM Rules for Companies. The Directors consider, having consulted with the Company’s Nominated Adviser, Cenkos Securities, that the terms of the transaction are fair and reasonable insofar as shareholders are concerned.

Commenting on variation, Jamal Rushdy, CEO says:We are appreciative of Norgine Ventures’ continued support and confidence in our business prospects and progress to offer us this variance, consistent with our previously announced precautionary cash-preserving measures in response to COVID-19.“

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014.

 

Enquiries:

Collagen Solutions Plc Via Walbrook
Chris Brinsmead, Chairman  
Jamal Rushdy, CEO
Hilary Spence, CFO  
Cenkos Securities Plc (Nominated Adviser and Broker)
Giles Balleny (Corporate Finance) Tel: 0207 397 8900
Stephen Keys  
 
Walbrook PR Ltd Tel: 020 7933 8780 or [email protected]
Anna Dunphy Mob: 07876 741 001

About Collagen Solutions:

Collagen Solutions Plc is a global supplier, developer, and manufacturer of medical grade collagen, tissues, and related medical devices and components for use in regenerative medicine, tissue engineering, and research. The Company is also expanding its range of biomaterials-based finished medical devices based on its internal and acquired intellectual property for commercialisation with partners via licensing and distribution arrangements, including ChondroMimetic®. The Company's products are used in a wide variety of applications including orthopaedics, cardiovascular, dental, plastic surgery, wound healing, neurology and urology.

FORWARD LOOKING STATEMENTS

This announcement (including any information incorporated by reference in this announcement), contains certain statements that are or may be deemed to be forward looking statements. Such statements are prospective in nature. All statements other than historical statements of fact may be forward looking statements. Without limitation, statements containing the words "targets", "plans", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "estimates", "projects", "remain confident that" or "considers" or other similar words may be forward looking statements.

Forward looking statements are based on current expectations that involve or are subject to risks, changes in circumstance, assumptions and uncertainties. Important factors such as business or economic cycles, the measures introduced in response to the COVID-19 pandemic, the terms and conditions of the Company's financing arrangements, tax rates, or increased competition may cause the Company's actual financial results, performance or achievements to differ materially from any forward looking statements. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward looking statements. The information in this announcement is provided only as at the date of its release, and the Company disclaims any obligation to update any forward looking or other statements contained herein, except as required by applicable law.

A copy of this announcement will be available at https://ir.collagensolutions.com/content/news/ir_news. For the avoidance of doubt, the content of the website referred to above is not incorporated into and does not form part of this announcement.

 

[1] This cannot be exercised in the offer period relating to the announced strategic review and formal sale process (16 April 2020). In addition, this option will lapse when the Norgine Ventures debt is repaid.”

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