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Resverlogix Secures an Additional $30 Million from Citibank Loan

Published: Saturday, July 05, 2014
Last Updated: Saturday, July 05, 2014
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Special meeting of shareholders called to approve.

Resverlogix Corp. has announced that it has entered into an Amended and Restated Loan Agreement with Citibank, N.A. ("Citibank") which provides for the existing loan granted to Resverlogix by Citibank to be increased by $30 million to $68.8 million (the "Amendment").

The loan will be repayable upon maturity on August 28, 2017 and may be prepaid in whole or in part without penalty. Interest on the loan will be payable annually in arrears at a rate equal to the per annum Canadian one-year LIBOR swap rate plus 3.14%, to be reset annually. The loan will be secured by an irrevocable $68.8 million Standby Letter of Credit (the "Letter of Credit") arranged by Eastern Capital Limited ("Eastern") which will be maintained until maturity of the loan.

Resverlogix intends to use the net proceeds from the loan to fund clinical trials in targeted high risk patient groups as well as research and development activities, general and administrative expenses and other general corporate purposes. The transaction was unanimously approved by Resverlogix's board of directors.

In connection with the Letter of Credit, Resverlogix has agreed to indemnify Eastern for all liabilities, costs and expenses arising from any payments made to Citibank under the Letter of Credit and, as with the previous Citibank loans, Resverlogix will pledge its patents and certain tax losses and pools to Eastern as security for its obligations under the indemnity.

Resverlogix will also issue an additional 5,000,000 share purchase warrants to Eastern in connection with the loan increase and will pay a guarantee fee to Eastern in the amount of 0.03% per annum on the average daily aggregate principal amount of the issued and undrawn Letter of Credit. Each warrant will be exercisable at $0.75 per share and will be exercisable for a period of five years. Eastern holds 14,965,307 shares of Resverlogix which represents 17.55% of the 85,289,247 common shares outstanding before giving effect to any outstanding warrants. Eastern currently holds 2,578,232 common share purchase warrants of Resverlogix.

Assuming all warrants are exercised before giving effect to the transaction, Eastern will hold approximately 19.97% of the common shares outstanding. After giving effect to the transaction, assuming all warrants held by Eastern are exercised, Eastern would hold 22,543,539 shares of Resverlogix representing 24.27% of Resverlogix's issued and outstanding common shares based on shares outstanding as at today's date.

The closing of the Amendment will be subject to, among other things, customary closing conditions for a transaction of this nature and shareholder approval of the majority of the votes cast by the shareholders of Resverlogix, excluding Eastern, at a special meeting of the shareholders of Resverlogix to be held on August 13, 2014 (the "Meeting"). A management information circular containing a complete description of the Amendment will be sent to shareholders in advance of the Meeting. The Amendment is scheduled to close in August 2014, subject to satisfaction of customary closing conditions and all necessary approvals being obtained. The issuance of the 5,000,000 share purchase warrants to Eastern is also subject to approval by the Toronto Stock Exchange.

"We are pleased to have the opportunity to further use our arrangement with Citibank and Eastern to fund our Phase 2b trial with considerably less dilution than conventional equity financing and with the flexibility to repay the loan in whole or in part at any time," stated Donald McCaffrey, President and CEO of Resverlogix. "We are looking forward to initiating our new RVX-208 clinical trials that will be based on the enormous epigenetic-related data that was generated in the exploratory ASSURE and SUSTAIN trials. RVX-208 has a very bright future in many indications ranging from arterial plaque regression to inflammatory diseases and various metabolic disorders." added Mr. McCaffrey.


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