Units consist of 10-year senior convertible promissory notes, warrants
By Susanna Moon
Chicago, Sept. 6 - Genta Inc. entered into a securities purchase agreement to issue up to $12.7 million of units consisting of 10-year convertible promissory notes and warrants, according to an 8-K filing with the Securities and Exchange Commission.
The units consist of the following:
• 12% senior secured convertible promissory notes due Sept. 9, 2021, convertible into common shares, at an initial conversion rate of 671,040 shares for every $1,000 principal amount, and putable at par beginning March 9, 2012;
• Senior secured convertible promissory note warrants for up to $4,233,333.33 of the convertible promissory notes, exercisable at $1,000 per warrant for five years;
• 12% senior secured cash collateralized convertible promissory notes due Sept. 9, 2021, convertible into shares, at a rate of 671,040 shares per $1,000 principal amount, and putable at par beginning Sept. 9, 2012; and
• Senior secured cash collateralized convertible promissory note warrants for up to $8,466,666.67 of cash collateralized convertible promissory notes, exercisable at $1,000 per warrant for five years.
The placement will close on Sept. 9.
Proceeds will be used for general corporate purposes.
Rodman & Renshaw, LLC is the placement agent.
"This financing, if fully funded, would provide sufficient funds for more than a year of operations at our projected burn rate," Raymond P. Warrell, Jr., Genta's chief executive officer, said in a press release.
"Key projects include finalization of regulatory review for pivotal studies of tesetaxel and selection of a lead compound for IND filing from the oral gallium portfolio."
Placement details
If the stock issuable upon conversion of the notes exceeds the warrant strike price, holders may exercise the warrant without cash payment in exchange for a note with a reduced principal amount.
The conversion price for the convertible promissory notes will be reduced if on the last trading day prior to the Saturday following the date that is two weeks after the effective date of the reverse stock split the volume-weighted closing price of the stock for the three consecutive trading days prior to the first adjustment date is less than the conversion price for the notes then in effect. In that case the conversion price will be equal to 10% of the first three-day volume-weighted closing price.
Also, if on the last trading day prior to the Saturday following the date that is eight weeks after the first adjustment date the volume-weighted closing price of the company's stock for the three consecutive trading days prior to the second adjustment date is less than the conversion price for the notes then in effect, the conversion price will be reduced to 10% of the second three-day volume-weighted closing price.
If on the last trading day prior to the Saturday following the date that is six months after closing the volume-weighted closing price for the three consecutive trading days prior to the third adjustment date is less than the conversion price for the notes then in effect, the conversion price for the notes will be reduced to 10% of the third three-day volume-weighted closing price.
In addition, the conversion rate of all of the notes will be reduced if the company issues additional shares for less than the conversion price or if the conversion or exercise price of stock is adjusted or modified to a price less than the conversion price.
Under the agreement, the company also agreed not to file a registration statement or complete a registered offering for one year. The company also agreed not to complete any more capital offerings that rank senior to or pari passu to the notes in the placement.
The company's officers and directors executed lock-up agreements, agreeing to refrain from any resale for six months or another agreed-upon time.
Genta is a biopharmaceutical company focused on treatments for cancer based in Berkeley Heights, N.J.
| Issuer: | Genta Inc.
|
| Issue: | Units of senior secured convertible promissory notes, senior secured convertible promissory note warrants, senior secured cash collateralized convertible promissory notes and senior secured cash collateralized convertible promissory note warrants
|
| Amount: | $12.7 million
|
| Maturity: | Sept. 9, 2021
|
| Coupon: | 12%
|
| Price: | Par
|
| Conversion ratio: | 671,040 shares for every $1,000 principal amount
|
| Warrants: | For up to $4,233,333.33 of notes, for up to $8,466,666.67 of cash collateralized notes
|
| Warrant expiration: | Five years
|
| Put option: | Beginning March 9, 2012, Sept. 9, 2012
|
| Pricing date: | Sept. 2
|
| Stock symbol: | OTCBB: GNTA
|
| Stock price: | $0.02 at close Sept. 1
|
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