Aegros Limited proposes to issue debentures in a series of tranches up to an aggregate face value of AUD25 million for subscription by investors

 Summary of the Proposed Debenture Issue

Parties

The Issuer / Borrower

Aegros Limited

Guarantors

Aegros Therapeutics Pty Limited ACN 003 131 548

Aegros Engineering Pty Limited ACN 623 563 100

Aegros Membranes Pty Limited ACN 624 585 299

Aegros Advanced Adhesives Pty Ltd ACN 670 911 403

 

and all subsequently established subsidiaries of the Borrowers subject to a 95% EBITDA and 95% Total Assets Guarantor Coverage test.

Group

All Borrowers, Guarantors, and subsidiaries of Aegros Limited.

The Arranger

FC Funds Management Pty Limited ACN 161 055 152.

Structure

Facility Tranche 1

Senior Secured R&D & Working Capital Facility.

Facility Tranche 2

Senior Secured R&D & Working Capital Accordion Facility.

Security Ranking

The Facility will be first ranking senior secured over all Borrowers and all subsidiaries subject to a 95% EBITDA and 95% Total Assets Guarantor Coverage test.

Facility Limit

AUD25,000,000 (twenty-five million dollars).

Tranche 1 Limit

AUD15,000,000 (fifteen million dollars).

Tranche 1A Sub-Limit

AUD10,000,000 (ten million dollars).

Tranche 1B Sub-Limit

AUD5,000,000 (five million dollars).

Tranche 2 Limit

AUD10,000,000 (ten million dollars).

Facility Term

12 months from first drawdown.

Financial Close

The date upon which all Conditions Precedent are met or waived by the Investors at their absolute discretion.

Purpose

To fund accrued non-equipment R&D Tax Offset Refunds (R&DTOR) available to the Borrower from the Australian Tax Office (ATO) and fund the completion of the HaemaFrac ® facility at 6 Eden Park Drive, Macquarie Park, NSW 2113, Australia.

Facility Currency

 

Investors may elect to provide their commitments in either AUD or USD with formal documentation to incorporate relevant mechanisms and may include provision to the Borrower of both AUD and USD tranches.

Facility Tranche 2 Mechanism

 

The Borrower must in the first instance approach existing Investors to provide the Tranche 2 Facility on the same terms and conditions as Facility Tranche 1. The existing Investors will have 4 weeks to provide credit approvals to the Borrower. If Investors do not provide approvals within this timeframe, the Borrower may approach new Investors to provide the facility.

Borrowing Base

 

Availability is subject to the Borrowing Base calculated as follows:

A – (B + C) + D + E = FA = 85% of the non-equipment R&DTOR which has been accrued but not yet received as detailed in the Review Letter.B = Current outstanding of the FacilityC = Any clawback amount advised by the ATO or taxes otherwise due to the ATO.D = Orderly Liquidation Value of Property, Plant & Equipment per the Valuation ReportE = 5% of the total Share Capital as at the date of the Utilisation RequestF = The amount available for drawdown.

Availability

Available for drawdown until 30th September 2024 subject to Conditions Precedent to Drawdown and the Borrowing Base being satisfied.

Drawdown

Tranche 1A is to be fully drawn at Financial Close.

 

Tranche 1B is subject to the Borrower raising an additional USD$5 million minimum equity capital by 31st March 2024.

Tranche 2 is subject to the Borrower raising an additional USD$15 million by 30th June 2024.

Repayment

The Borrower may repay the Facility upon giving no less than 2 Business Days’ notice. Any repayment shall be subject to a minimum of AUD1,000,000.

Cancellation

All repayment amounts will be a cancellation of the Facility Limit and not available for redraw.

Interest & Fees

Arranging Fee

1.00% (plus GST) of the Tranche 1 Limit payable on Financial Close to Investors.

Interest Rate

16.00% per annum payable on drawn balances, calculated daily and paid monthly in arrears.

Unutilised Commitment Fee

2.95% per annum payable to Investors on the undrawn balance of the Tranche 1B Sub-Limit, calculated daily and paid monthly in arrears.

Default Interest

Interest Rate plus 2.00% per month on drawn balances for periods in which an Event of Default is subsisting.

Minimum Earn

The Facility is subject to a minimum earn of 9 months interest on the Tranche 1 Limit (the Minimum Earn doesn’t include any amount received in relation to the Arranging Fee, Work Fee and Due Diligence Fee).

Cessation of Business Fee

 

If the Borrower ceases business and an administrator or liquidator is appointed, a fee equivalent to 10% of the Facility Limit at the time of appointment will be payable to the Investors and become senior secured debt.

Review Events & Events of Default

Review Events

The occurrence of a Review Event will automatically facilitate a 14-day review and discussion period between the Borrowers and Investors. If at the end of this 14-day period, the Investors acting reasonably are not satisfied with the outcome of these discussions, they may declare all monies due and payable subject to a notice period of 7 days.

Events of Default

 

The occurrence of an Event of Default, subject to remedy period of 10 Business Days where the breach is capable of remedy, will entitle the Investors to declare that the amounts owing are immediately due and payable and/or its obligations under the Facility are terminated.

Security & Documentation

Security

First ranking General Security Agreement (GSA) over all Borrowers and all subsidiaries. For the avoidance of doubt, this includes a charge or control over the Payment Account;Mortgage of Lease over the property at 6 Eden Park Drive, Macquarie Park, NSW 2113, Australia;Consent to Mortgage of Lease over the property at 6 Eden Park Drive, Macquarie Park, NSW 2113, Australia; andDirectors’ fraud indemnity.

Conditions

Condition(s) Precedent

The following conditions are to be met ahead of completion.

Satisfactory due diligencePerfected GSA over the Borrower, Guarantors, and subsidiariesEntry in final Facility Agreement and security documents.

Condition(s) Precedent to each drawdown

 

The following conditions are to be met ahead of each drawdown:

no Events of Default, potential Event of Default or Review Event is in subsistence.

Others

Other matters

The legal documentation will include other issues not covered above that are normal for lending facilities of this type, including but not limited to:

Representations and warrantiesPositive and negative undertakings; andRights for the Investor to syndicate or assign some or all of the Facility to a third-party.

Governing Law

New South Wales, Australia.