CALGARY, Aug. 28, 2017 /CNW/ - Resverlogix Corp. ("Resverlogix" or the "Company") (TSX:RVX) announced today the following update on its corporate activities.
Extension of Maturity Date of Loan
The Company announced that the maturity date of the Company's CAD$68.8 million Loan (the "Loan") will be extended from August 28, 2017 to December 26, 2017. In addition, interest on the Loan shall continue to accrue, but shall not be payable until the new maturity date. The Loan is secured by an irrevocable CAD$68.8 million Standby Letter of Credit (the "Letter of Credit") in favour of the lender arranged by Eastern Capital Limited ("Eastern") which will be maintained until maturity of the Loan. In conjunction with the Loan extension, the Loan will be assigned from Citibank, N.A. to a lender affiliated, directly or indirectly, with Eastern (the "Lender").
The Company previously agreed to indemnify Eastern for any amounts drawn under the Letter of Credit, pledged its issued patents and certain tax loss pools to Eastern as security for its obligations under the indemnity and agreed to pay a fee in the amount of 0.03 percent per annum on the undrawn amount of the Letter of Credit. In connection with the extension of the Loan, the Company will grant to the Lender a security interest in all of its assets as security for the Loan and the Company will increase the fee payable to Eastern on the undrawn amount of the Letter of Credit from 0.03 percent to 12 percent per annum.
The Loan extension is subject to execution of definitive agreements and satisfaction of customary closing conditions which is expected to occur on or before August 31, 2017.
Mr. Donald McCaffrey, President and CEO stated, "We are pleased that the loan has been extended for four months as we expect, within that period of time, to close the contemplated transaction we also announced today and close or significantly advance other similar initiatives that we have been diligently pursuing. Closing of any of these transactions would be anticipated to provide funding more than sufficient to retire the loan in full. Our goal remains to create long-term value for our shareholders."
The agreement to indemnify and grant security interests to Eastern or its affiliates in connection with the Loan extension is a "related party transaction" within the meaning of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101") as Eastern is an insider of the Company. The Company is relying on the "financial hardship" exemption from the minority approval requirement under MI 61-101 based on the board of directors having unanimously determined that the Company is in serious financial difficulty, the Loan extension is designed to improve the financial position of the Company and the terms of the Loan extension are reasonable in the circumstances of the Company. The Company anticipates filing a material change report less than 21 days prior to the closing of the Loan extension as closing must occur expeditiously in order to comply with the terms of the Loan.
The Company also announces that it has received a letter of intent regarding a significant potential regional licensing arrangement (the "License") for apabetalone (RVX-208), and/or a significant equity investment in the Company. The License is expected to include an upfront payment and on-going milestone and royalty payments. Management will continue to diligently pursue this opportunity. Additional licensing opportunities are also in discussion.
Resverlogix is developing apabetalone (RVX-208), a first-in-class, small molecule that is a selective BET (bromodomain and extra-terminal) inhibitor. BET bromodomain inhibition is an epigenetic mechanism that can regulate disease-causing genes. Apabetalone is the first and only BET inhibitor selective for the second bromodomain (BD2) within the BET protein called BRD4. This selective inhibition of apabetalone on BD2 produces a specific set of biological effects with potentially important benefits for patients with high-risk cardiovascular disease (CVD), diabetes mellitus (DM), chronic kidney disease, end-stage renal disease treated with hemodialysis, neurodegenerative disease, Fabry disease, peripheral artery disease and other orphan diseases, while maintaining a well described safety profile. Apabetalone is the only selective BET bromodomain inhibitor in human clinical trials. Apabetalone is currently being studied in a Phase 3 trial, BETonMACE, in high-risk CVD patients with type 2 DM and low high-density lipoprotein (HDL), and is expected to be initiated in a Phase 2a kidney dialysis trial designed to evaluate biomarker changes and safety parameters in up to 30 patients with end-stage renal disease treated with hemodialysis.
Resverlogix common shares trade on the Toronto Stock Exchange (TSX:RVX).
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This news release may contain certain forward-looking information as defined under applicable Canadian securities legislation, that are not based on historical fact, including without limitation statements containing the words "believes", "anticipates", "plans", "intends", "will", "should", "expects", "continue", "estimate", "forecasts" and other similar expressions. In particular, this news release includes forward looking information relating to an extension of the maturity date of the Company's loan, the expectation that the Company will close a strategic transaction involving a licensing arrangement prior to the amended maturity date of the Loan, and the potential role of apabetalone in the treatment of CVD, DM, chronic kidney disease, end-stage renal disease treated with hemodialysis, neurodegenerative disease, Fabry disease, peripheral artery disease and other orphan diseases. Our actual results, events or developments could be materially different from those expressed or implied by these forward-looking statements. We can give no assurance that any of the events or expectations will occur or be realized. In particular, there is no assurance that the Company will complete a strategic transaction or that the proceeds from any such transaction will be sufficient to enable the Company to repay the Loan by the amended maturity date. By their nature, forward-looking statements are subject to numerous assumptions and risk factors including those discussed in our Annual Information Form and most recent MD&A which are incorporated herein by reference and are available through SEDAR at www.sedar.com. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement and are made as of the date hereof. The Company disclaims any intention and has no obligation or responsibility, except as required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
SOURCE Resverlogix Corp.