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Pharming announces completion of its refinancing with a single US$100 million debt facility on improved commercial terms

Pharming Group N.V. announces that it has completed the replacement of its recently announced US$100 million bridge finance with OrbiMed Advisors with a US$100 million permanent facility agreement with OrbiMed Advisors. The bridge finance was used to redeem the Amortizing Convertible Bonds due 2017/2018, and to refinance the Company’s senior debt facility with Silicon Valley Bank and Kreos Capital, together with the associated prepayment fees and the legal and other costs of the transaction. The loan, initially structured as a bridge facility, has been replaced by a full loan agreement with a maturity date of July 2021 under unchanged terms and conditions as described below.

Highlights
  • One four year $100m (€91.7 million) Senior Secured Debt facility to refinance debt on more favourable terms to redeem a total of €35.9 million (US$39.1 million) of Amortising Convertible Bonds and refinance US$40 million of Senior Debt.
  • Net effect of the refinance:
  • Release of 124.2 million shares reserved against the Amortizing Convertible Bonds, minus just under 9.2 million warrants for OrbiMed, eliminates risk of approximately 24% current dilution effect for existing shareholders
  • Significant reduction of near term cash burn (from amortisations and debt repayments) of approximately €16 million in 2017 and almost €8 million in 2018, which will allow for investment in RUCONEST® commercialisation and pipeline development
  • Existing €11.8 million 5 year (December 2021) 8.5% Ordinary Convertible Bonds are unaffected by this transaction.
  • No significant effect on Company’s cash balance.
Dr Sijmen de Vries, CEO of Pharming, commented:
“We are delighted to announce that we now completed the full refinancing of the Senior Debt and Amortizing Convertible Bonds on such excellent terms. OrbiMed Advisors is one of the world’s leading specialty debt investors in the life science sector, and we are very pleased to have them as a long term partner.

This new refinance enabled us to remove from the market the likelihood of issue of a substantial part of our authorized share capital (124 million shares) that was tied to the Amortising Convertible Bonds facility. With a conversion price of €0.289, these Bonds might otherwise have been converted into shares at significant discount to the current market price.

The net effect on the Company’s financial statements is also very positive. We will not be required to make repayments over the next 12 months of almost €3 million per month in cash (or in shares at a discount) on the Amortizing Convertible Bonds, nor to make repayments of almost €1 million per month on the senior debt from December this year until September of next year. This allows us to invest our cash into promoting RUCONEST® and developing our pipeline and facilities, thereby enhancing growth opportunities. This is, therefore, another good day for all our stakeholders.”

Further details on new permanent Debt Facility
  • The Company has signed an agreement with OrbiMed Advisors (the Lender) for a US$100 million (€91.7 million), four year debt facility on improved commercial terms. The overall interest rate is approximately 12%, reducing to 11% if the Company achieves net sales in the USA of US$100 million per annum during the term of the loan. Only part of the interest must be paid in cash. The loan will be interest only for twelve months, after which it will amortise in equal quarterly tranches until July 2021.
  • The loan has been used to redeem the current Amortizing Convertible Bonds due 2017/2018, in an amount of €44.9 million including early repayment fees, and also to refinance the existing senior debt facility in an amount of €43.3 million including early repayment fees.
  • As a result of the retirement of the Amortizing Bonds, the 124.2 million shares which were reserved against conversion of the remaining Amortizing Bonds, are no longer reserved for that purpose, and have been returned to treasury. Net of the shares which will be reserved for the new warrants, this means a total of 115.0 million shares (approximately 24% of the issued share capital). The Company has no plans to issue these shares at this time.
  • Also as a result of this transaction, the Company’s cash burn will be reduced by the likely amount of cash repayments under the Amortizing Convertible Bonds in the rest of 2017 and in 2018, plus the amount of the cash repayments on the senior debt facility which would have started in December 2017. The net positive effect during the remainder of 2017 is expected to be €12.3 million, and the net positive effect in 2018 is expected to be €7.7 million. This excludes the effects on the Company of any repayments of the Amortizing Convertible Bonds which might have been made in shares.

Bron: Pharming

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