Davis biotech firm Marrone Bio Innovations Inc. said Monday that it has entered into agreements that would create working capital and wipe out a major portion of its long-standing debt.
The major financing and debt-restructuring plan hinges on two key elements: an agreement with investors who plan to purchase about $30 million in common stock and the issuing of shares to investors to effectively convert $45 million worth of debt into equity.
MBI said its expects the securities purchase agreement transactions to close in February, subject to various conditions, including approval by stockholders.
If approved, company founder and CEO Pam Marrone said, “we won’t have any distractions looking for money … We believe these transactions represent a significant milestone in our corporate history, putting us in a strong position to execute and focus on our core business, which continues to drive ahead.”
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MBI said the investors include one current shareholder and two new ones, including New York-based Ospraie Ag Science LLC, which is controlled by Dwight W. Anderson, the hedge fund manager and founder of Ospraie Management LLC.
Amendments to senior secured promissory notes and an existing loan agreement call for the conversion of about 25.7 shares of common stock at a rate of $1.75 a share, accounting for the conversion of debt into equity.
MBI said it expects to receive cash net proceeds of approximately $27.7 million from the proposed transactions, which it intends to use for working capital and general corporate purposes.
The agreement also calls for the appointment of directors designated by Ospraie to MBI’s board.
The company said its outstanding indebtedness is expected to be reduced from an aggregate principal amount of $62.5 million to $17.5 million.