On August 13, 2021 Protalix BioTherapeutics, Inc. (NYSE American:PLX) (TASE:PLX), a biopharmaceutical company focused on the development, production and commercialization of recombinant therapeutic proteins produced by its proprietary ProCellEx plant cell-based protein expression system, reported the entry into definitive agreements (the "Exchange Agreements") relating to exchanges (the "Exchanges") of an aggregate of $54.65 million principal amount of the Company’s outstanding 7.50% Senior Secured Convertible Notes due 2021 (the "Existing Notes") for an aggregate of $28.75 million principal amount of newly issued 7.50% Senior Secured Convertible Notes due 2024 (the "Exchange Notes"), $25.90 million in cash and accrued and unpaid interest through the closing date (Press release, Protalix, AUG 13, 2021, View Source [SID1234586550]). The Exchanges are expected to close as soon as practicable, subject to satisfaction of certain closing conditions. Following the closing of the Exchanges, the Company expects that $3.27 million aggregate principal amount of the Existing Notes will remain outstanding.
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"The exchange of the notes underscores Protalix’s commitment to addressing our capital structure while continuing development of our pegunigalsidase alfa program and our early pipeline," said Dror Bashan, Protalix’s President and Chief Executive Officer. "We believe that the participation of so many of our institutional note holders, including funds managed by Highbridge Capital Management, LLC, UBS O’Connor LLC, Citigroup Global Markets, Whitebox Advisors, and Tulip Capital, is a telling vote of confidence in Protalix."
Like the Existing Notes and at equal priority, the Exchange Notes will be secured by perfected liens on all of the material assets of the Company and its subsidiaries. Interest on the Exchange Notes will be payable semi-annually at a rate of 7.50% per annum. The Exchange Notes will mature three years after issuance, unless earlier purchased, converted, exchanged or redeemed, and will be guaranteed by the Company’s subsidiaries.
Holders may require the Company to repurchase their Exchange Notes upon the occurrence of certain events that constitute a fundamental change under the indenture that will govern the Exchange Notes (the "Indenture") at a purchase price equal to the principal amount thereof plus accrued and unpaid interest to, but excluding, the fundamental change purchase date.
Holders may convert their Exchange Notes at any time prior to the close of business on the business day immediately preceding the stated maturity date of the Exchange Notes. Upon conversion, the Company may, at its election, deliver shares of the Company’s common stock ("Common Stock"), cash or a combination of shares of Common Stock and cash based on the applicable conversion rate. However, until the Company obtains stockholder approval to issue additional shares of Common Stock upon conversion of the Exchange Notes, the Company will be required to settle at least a portion of its conversion obligation in cash. The Company intends to seek stockholder approval promptly in order to be able to settle conversions of the Exchange Notes in Common Stock.
The initial conversion rate will be based on a 32.5% premium to the closing price of the Common Stock on the NYSE American at the close of trading on August 13, 2021.
The Indenture includes covenants customary for instruments of this type, including, without limitation, restrictions on the Company’s ability to incur additional indebtedness, create liens on its properties, pay dividends and make restricted payments or certain investments, and also requires the Company to apply a portion of the proceeds from certain asset sales or licensing arrangements to repay the Exchange Notes, in each case subject to certain exceptions.
"This exchange transaction allows us to continue to advance our lead drug candidate, PRX-102, towards approval and to progress our early stage pipeline candidates," said Eyal Rubin, Protalix’s Sr. Vice President and Chief Financial Officer.
This announcement is neither an offer to sell nor a solicitation of an offer to buy any of these securities and shall not constitute an offer, solicitation, or sale in any jurisdiction in which such offer, solicitation, or sale is unlawful. The offer and sale of the Exchange Notes and the shares of Common Stock issuable upon conversion of the Exchange Notes, if any, will not be registered under the Securities Act of 1933 or any state securities laws, and unless so registered, the Exchange Notes and such shares may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act of 1933 and applicable state laws.