ProMetic gets $13 million loan and equity injection from Abraxis

ProMetic Life Sciences (TSX:PLI) has closed a $13 million (U.S.) financing deal with Abraxis BioScience (NASDAQ:ABII) of Los Angeles.

“These funds, coupled with our revenue growth, place ProMetic on a strong financial footing,” CEO Pierre Laurin said in a statement. “What is great about this loan is that its repayment structure allows management to focus on increasing the share price, thereby minimizing the potential dilutive effect of any subsequent conversion of the debt on existing shareholders.”

The transaction includes a five-year, $10 million loan bearing annual interest of 5% and repayable in five annual instalments. Abraxis has the option to request that each annual instalment be converted into ProMetic equity at future prevailing market prices.

Abraxis, which already has a business and equity relationship with Prometic, also injected $3 million into ProMetic by acquiring 17.85 million new shares at 18 cents each, raising its holding to about 33.5 million shares, or 9.59%, of ProMetic.

Separately, Abraxis also obtained the right to acquire up to about 44.8 million additional common shares at a price 47 cents (Canadian) each for a period of seven years. Assuming the exercise of its right, Abraxis would hold 19.86% of ProMetic.

“The level of cash invested, when combined with product and service sales, provides a runway of cash for the foreseeable future,” said CFO Bruce Pritchard. “However, management will continue to tightly control costs, focusing spending only on those areas of value creation, and of course will continue to aggressively pursue revenue growth opportunities.”