Cell Therapy News/Articles, page-16813

It's a serious issue for investors Wes. In two weeks, that agreement expires. That's how long you have to pretend it's not a major problem.

" Borrowings Oaktree arrangement
In November 2021, we entered into a $90.0 million five-year senior debt facility provided by funds associated with Oaktree. We drew the first tranche of $60.0 million on closing. We will seek to extend our option to draw the additional $30.0 million tranche beyond September 30, 2023, subject to us achieving certain milestones. The facility has a three-year
interest only period, at a fixed rate of 9.75% per annum, after which time 40% of the principal amortizes over two years and a final payment is due no later than November 2026. The facility also allows us to make quarterly payments of interest at a rate of 8.0% per annum for the first two years, and the unpaid interest portion (1.75% per annum) will be added to the outstanding loan balance and currently accrues further interest at a fixed rate of 9.75% per annum.

On November 19, 2021, Oaktree were granted warrants to purchase 1,769,669 American Depositary Shares (“ADSs” at $7.26 per ADS, a 15% premium to the 30-day VWAP. We determined that an obligation to issue the warrants arose from the time the debt facility was signed; consequently, a liability for the warrants was recognized in November
2021. The warrants were legally issued on January 11, 2022 and may be exercised within 7 years of issuance. On the issuance date of the Oaktree facility and the warrants, the warrants were initially measured at fair value and the Oaktree borrowing liability measured as the difference between the $60.0 million received from the Oaktree facility and the fair
value of the warrants.

In December 2022, we amended the terms of the loan agreement with Oaktree and in connection with the loan amendment, Oaktree was granted warrants to purchase 455,000 ADSs at $3.70 per ADS, a 15% premium to the 30-day VWAP. We determined that an obligation to issue the warrants arose from the time the first amendment to the loan agreement was signed; consequently, a liability for the warrants was recognized in December 2022. The warrants were legally issued on March 8, 2023 and may be exercised within 7 years of issuance.

In the year ended June 30, 2023, we recognized a loss of $1.6 million in the Consolidated Income Statement as remeasurement of borrowing arrangements within finance costs. Within this $1.6 million loss, $1.0 million relates to the remeasurement due to additional warrants being issued to Oaktree as a result of the first amendment to the loan agreement
and $0.6 million relates to the adjustment of the carrying amount of our financial liability to reflect the revised estimated future cash flows from our credit facility. In the year ended June 30, 2022, we recognized a minimal gain in the Consolidated Income Statement as remeasurement of borrowing arrangements within finance costs in relation to the
adjustment of the carrying amount of our financial liability to reflect the revised estimated future cash flows from our credit facility.

We have pledged substantially all of our assets as collateral under the loan facility with Oaktree."