Aug 28 2012
Resverlogix Corp. (TSX: RVX) today
announced that it has entered into a $25 million Loan Agreement with
Citibank, N.A. ("Citibank"). Resverlogix received the $25 million upon
closing of the loan. The loan is repayable upon maturity on August 24,
2017 and may be repaid in whole or in part after August 23, 2013
without penalty. Interest on the loan is payable annually in arrears at
4.5% per annum for the first year of the loan and thereafter at a rate
equal to Canadian one-year LIBOR swap rate plus 3.14%, to be reset
annually. The loan is secured by an irrevocable $25 million Standby
Letter of Credit (the "Letter of Credit") arranged by Eastern Capital
Limited ("Eastern") which will be maintained until maturity of the
loan.
In connection with the irrevocable 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 Resverlogix has pledged its issued patents and certain tax losses
and pools to Eastern as security for its obligations under the
indemnity. Resverlogix also issued 1,320,000 share purchase warrants to
Eastern 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 is exercisable at a price of
$1.58 for a period of five years. The expiry date of the warrants is
August 27, 2017. Before giving effect to the transaction, Eastern
Capital holds 13,200,000 shares of Resverlogix which represents 17.8%
of the 74,210,483 common shares outstanding. After giving effect to
the transaction, assuming all warrants are exercised, Eastern will hold
14,520,000 shares of Resverlogix representing 19.2% of Resverlogix's
issued and outstanding common shares based on shares outstanding as at
today's date. Resverlogix is exempted from formal valuation and
minority approval requirements of applicable securities laws on the
basis that the fair market value of the warrants does not exceed 25% of
Resverlogix's market capitalization.
Resverlogix intends to use the net proceeds from the loan to fund
research and development activities, general and administrative
expenses, increased working capital and other general corporate
purposes. The transaction was unanimously approved by Resverlogix's
board of directors.
"We are pleased to partner with Citibank and Eastern on this unique
transaction that offers an attractive cost of capital and freedom to
repay the loan in whole or in part at any time after August 23, 2013
with minimal dilution," stated Donald McCaffrey, president and chief
executive officer of Resverlogix.