On November 23, 2020 GENFIT (Nasdaq and Euronext: GNFT) a late-stage biopharmaceutical company dedicated to improving the lives of patients with metabolic and chronic liver diseases, reported the final terms of the partial buyback of its convertible bonds maturing in October 2022 ("2022 OCEANEs" or "OCEANEs") and the proposed amendment of the existing terms of the 2022 OCEANEs (Press release, Genfit, NOV 23, 2020, https://ir.genfit.com/news-releases/news-release-details/genfit-announces-final-terms-proposed-renegotiation-2022-oceane [SID1234571540]).
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Objectives for the Proposed Renegotiation of 2022 OCEANE Terms
On November 16, 2020, GENFIT announced its intention to propose a partial buyback of the 2022 OCEANEs, as well as an amendment of the existing terms, with the objective of:
Capital preservation for the Company’s operational functionality;
Reduction of the nominal amount of financial debt to be redeemed;
Deferment of the OCEANEs maturity date in line with the next milestones in the Company’s two main programs: the ELATIVE Phase 3 clinical trial evaluating elafibranor in PBC and the NIS4 technology for NASH diagnosis;
Maximization of potential value-creation for shareholders and the 2022 OCEANEs holders.
Under these new terms, the final maturity of the 2022 OCEANEs would be deferred until October 16, 2025. The initiation of the early redemption period1 would be deferred until November 3, 2023.
Finally, in line with previous guidance, the Company has appointed Natixis and Kepler Cheuvreux (the "Counsels") to assist GENFIT with this transaction.
Partial buyback price, adjustment of the conversion ratio, and additional amendments to the existing terms of the 2022 OCEANEs
The Company and its Counsels have collected feedback from the 2022 OCEANEs holders in order to set the definitive terms of the partial buyback and the amendments of terms and conditions of the residual portion (following the partial buyback) of the 2022 OCEANEs.
The Company undertakes to repurchase, at a price of €16.40 per 2022 OCEANE, a maximum of 3,048,780 2022 OCEANEs, representing an amount equivalent to 50.1% of the outstanding 2022 OCEANEs.
The Company proposes to amend the terms of the 2022 OCEANEs that will not be repurchased and cancelled, as described below:
Maturity extension until October 16, 2025;
Increase of the conversion ratio from 1:1 to 1:5.5;
Deferral of the initiation of the early redemption period provided for in the 2022 OCEANEs terms and conditions (until November 3, 2023); and
Amendment of the ratchet clause adjusting the conversion ratio in the event of a tender offer targeting GENFIT shares, in order to take into account the extension of the 2022 OCEANEs maturity date from 2022 until 2025. The adjustment would be calculated from the date of approval by the 2022 OCEANEs holders of the amended terms (i.e. the date on which the 2022 OCEANEs holders meeting would be held) until the new maturity date (i.e. October 16, 2025).
The nominal value as well as the redemption price of the OCEANEs will remain unchanged at €29.60 per OCEANE. The other terms and conditions of the OCEANEs not mentioned above will remain unchanged.
The buyback price of €16.40 takes into account accrued interest until the buyback effective date that is anticipated to occur in January 2021, subject to the conditions set out below. The exact buyback date will be communicated at a later date.
Considering the new conversion ratio, the new shares that could be issued upon conversion of the OCEANEs would represent 42.9% of the current share capital of the Company (against 15.6% with the current conversion ratio). In the event of a full conversion of the OCEANEs, the OCEANEs holders would hold 30.0% of the share capital of the Company (29.7% in the case of exercise of the outstanding stock options, share warrants (BSA), and final allocation of the outstanding free shares as of the date hereof).
Implementation
The Company will collect through its Counsels, or through the 2022 OCEANEs Bondholder Representative (Representant de la Masse, at [email protected]) for the retail holders, the buyback requests through a fixed price reverse book building process.
Should the buyback requests from the 2022 OCEANEs holders exceed the €50 million maximum repurchase amount contemplated by the Company, buyback requests will be reduced proportionally to ensure equal treatment among all the 2022 OCEANEs holders.
Upon collection of requests and potential reduction as described above, the 2022 OCEANEs holders and the Company will be invited to enter into a Bond Repurchase Agreement, a draft of which is available upon request to the Counsels and, for retail holders, from the 2022 OCEANEs Bondholder Representative.
The reverse book building period, at a fixed price, will begin on November 23, 2020, and end on November 27, 2020 (inclusive).
Should the buyback requests be significantly lower than the €50 million repurchase proposal, the Company would withdraw its partial buyback and the 2022 OCEANEs terms amendment offer.
The partial buyback will remain contingent on and will occur after the following two events:
Approval by the Extraordinary General Meeting of the Company’s shareholders of the new conversion ratio;
Approval by the 2022 OCEANEs holders of the aforementioned amendments.
Upon receipt of the selling commitments from the 2022 OCEANEs holders through the signing of the Bond Repurchase Agreements, the Company will convene a general meeting of the shareholders and a general meeting of the 2022 OCEANEs holders, which are expected to be held in the first quarter of 2021.