AegirBio

The Loan Facility

The Loan Facility consists of seven (7) tranches with a total nominal amount of SEK 45.00 million, whereby Tranche 1 can be called upon by the Company from 1 April 2024 and amounts to SEK 7.50 million before deduction of a set-up fee of SEK 0.75 million, Tranche 2 can be called upon by the Company from 1 May 2024 and amounts to SEK 5,00 million before deduction of a set-up fee of SEK 0.50 million, Tranche 3 can be called upon by the Company from 1 July 2024 and amounts to SEK 10.00 million before deduction of a set-up fee of SEK 1.00 million, Tranche 4 can be called upon by the Company from 1 August 2024 and amounts to SEK 6,50 million before deduction of a set-up fee of SEK 0.65 million, Tranche 5 can be called upon by the Company from the date that occurs 150 trading days after the payment of Tranche 4 and amounts to SEK 7.00 million before deduction of a set-up fee of SEK 0.70 million, Tranche 6 can be called upon by the Company from the day that occurs 60 trading days after the payment of Tranche 5 and amounts to SEK 5.00 million before deduction of a set-up fee of SEK 0.50 million, and Tranche 7 can be called upon by the Company from the day that occurs 60 days after the payment of Tranche 6 and amounts to SEK 4.00 million before deduction of a set-up fee of SEK 0.40 million.

The difference between the nominal amount and the amount paid in cash in each Tranche corresponds to a set-up fee of 10.00 percent to Atlas. Furthermore, a transaction fee of SEK 7.00 million is payable to Atlas for the issuance of the Loan Facility, to be paid in full by AegirBio by way of set-off against newly issued shares (the “Transaction Fee Shares”) at Atlas’ request, but no later than on 5 May 2026. Thus, the transaction fee will not be deducted from the nominal amount of the Loan Facility. The set-up fee and transaction fee have been determined based on arm’s length negotiations between the Company and Atlas. Tranches drawn under the Loan Facility are interest-free and mature 36 months from today’s date. In addition to the above fees to Atlas, there are customary transaction costs that are estimated to be in the range of SEK 1.50 million to SEK 4.00 million. The extent of the transaction costs depends on how many Tranches are called upon.

In order to facilitate the administration of the conversions, the parties have agreed that Atlas may only sell the Transaction Fee Shares when Atlas has called for conversion of all or part of the paid Tranche into shares in the Company and that a share issue in accordance with the Loan Facility shall take place when Atlas has called for conversion of at least SEK 2.50 million. If the market value of the Transaction Fee Shares falls below SEK 1.00 million, the Company shall issue additional Transaction Fee Shares to faciltate that the market value of such shares is again SEK 7.00 million. If the market value of the Transaction Fee Shares is less than SEK 7.00 million on the earlier of (i)  5 May 2026 and (ii) the maturity date of the Loan Facility, Atlas shall be compensated so that the value of the Transaction Fee Shares is once again SEK 7.00 million. After this final, eventual, recalculation, Atlas is free to sell the Transaction Fee Shares at Atlas’ discretion and no further recalculation shall take place.SEK 25.00 million of the Loan Facility will be will be secured against a floating charge.

Atlas is entitled to request conversion of debt in directed share issues of all or part of the nominal amount of the requested Tranches together with the aforementioned transaction fee up to and including the maturity date, but to a value of at least SEK 0.50 million for each individual request for conversion to shares. In accordance with the terms and conditions of the Loan Facility, the conversion price shall correspond to 100.00 percent of the lowest daily volume-weighted average price according to the Nasdaq First North Growth Markets (“First North”) price list for the share in the Company during the fifteen (15) trading days preceding the Company’s receipt of a request for conversion, but not less than the share’s quota value (currently SEK 0.08). If the conversion price is below the quota value of the share, Atlas shall be compensated so that Atlas receives as many shares as Atlas would have received without taking into account the quota value limitation. For a trading day to be considered, the total daily trading volume must, inter alia, amount to at least SEK 25,000 and not be a day when Atlas has traded in shares in the Company. 

If full conversion has not taken place before the maturity date, Atlas shall have the right to either request (i) repayment of the disbursed Tranches with cash or (ii) request conversion of the outstanding debt to shares in accordance with the terms of the Loan Facility. In addition, the Company has the right at any time during the term to redeem outstanding loans under the Loan Facility with cash at a price equal to 110.00 percent of the nominal amount provided that Atlas, in connection with such request, does not wish to convert such debt into shares in accordance with the conversion terms. The total cash payment from the Loan Facility after deduction of the set-up fee amounts to SEK 40.50 million, corresponding to 90 percent of the Loan Facility’s total nominal amount.

The conclusion of the Loan Facility is conditional upon the completion of the amendments to the agreement for outstanding convertible bonds and the terms and conditions of the convertible bond. The Loan Facility is subject to obligations and commitments, guarantees and events of default (such as, for example, a material adverse change, delisting of the Company’s share or a final judgment on a material sanction fee in a pending case with the Swedish Financial Supervisory Authority). Calling upon Tranches is subject to conditions regarding the right to call for Atlas’ payment (such as, for example, that the share is traded on First North (or an equivalent market), minimum trading volume and minimum company value). Atlas has the right to waive the conditions for payment. The agreement contains several provisions on early termination and penalties in the event of delays by the Company, for example, delays in the delivery of shares can lead to extensive penalties and events of default can lead to Atlas terminating the agreement. Furthermore, for the Company to be entitled to request payment of Tranches 3–7, the Company’s average market value must be at least SEK 10.00 million during the 15 tradingdays preceding the request. In addition, in order to claim payment of the entire Tranche 3, (i) an amount corresponding to SEK 10.00 million must have been converted into shares by Atlas or (ii) there must have been a total trading volume in the Company’s share, excluding trading by Atlas, amounting to at least SEK 30.00 million calculated from the payment of Tranche 1. In order to call for payment of the entire Tranche 4, (i) an amount corresponding to SEK 16.50 million must have been converted to shares or (ii) there must have been a total trading volume in the Company’s share, excluding trading by Atlas, amounting to at least SEK 45.00 million from the payment of Tranche 1. However, the Company is entitled to call for all or part of Tranche 3 and 4 to the extent that the total outstanding amount of the Loan Facility and the outstanding convertible bonds of series 2023/2025 (excluding the Transaction Fee Shares) is less than SEK 52.50 million. The Company has undertaken to always have an authorization to issue shares in order to carry out the above transactions. 

In order to call for payment of Tranches 5–7, the accumulated trading volume for the Company must amount to at least SEK 4.00 million during the 20 trading days preceding the notice. In order to call for payment of Tranches 5–7, the total outstanding amount of the Loan Facility and the outstanding convertible bonds of series 2023/2025 must be less than SEK 10.00 million. 

Agreement to amend the terms of the outstanding convertible bonds

On 20 December 2022, AegirBio announced that the Company has agreed on a convertible financing with Atlas regarding convertible bonds of SEK 55.00 million (the “Convertible Bonds”) with attached warrants. Atlas has so far called for conversion to a total nominal amount of SEK 15.00 million, meaning that the outstanding nominal amount for the Convertible Bonds amounts to SEK 40.00 million. In connection with the conclusion of the Loan Facility, AegirBio and Atlas have reached an agreement to amend the agreement regarding the Convertible Bonds and the associated terms and conditions of the Convertible Bonds. The amendments aim, among other things, to extend the term of the Convertible Bonds by 12 months, reduce the minimum conversion amount for each individual conversion request from SEK 5.00 million to SEK 0.50 million, enable Atlas to sell shares representing more than 25 percent of the total trading volume of the Company’s share during any period of five trading days, and terminate outstanding warrants of series TO4 issued to Atlas. Furthermore, it has been agreed to introduce a regulation whereby if the calculated conversion price according to the terms and conditions of the Convertible Bonds is lower than SEK 1.00, instead of converting the Convertible Bonds according to the terms and conditions, Atlas shall sett-off the amount requested to be converted in a directed share issue on the same conversion terms as stated in the Loan Facility. Thereafter, a number of issued Convertible Bonds amounting to the requested conversion amount shall be terminated.

Amendments to the terms of the Convertible Bonds require the approval of an extraordinary general meeting, which is why the board intends to convene an extraordinary general meeting within shortly.

Background and rationale for raising the Loan Facility

AegirBio’s pursuit of a loan facility stems from a strategic imperative to sustain and bolster its’ innovative endeavours, particularly in the realm of advancing diagnostic accessibility. The genesis of this endeavour lies in the Company’s previous attainment of a substantial grant—amounting to 1.2 million USD—from the National Institutes of Health (NIH) through the RADx® Tech program. This grant was secured to facilitate the development of a digital multiplex self-test platform, specifically tailored to enhance accessibility for individuals with disabilities.The ongoing project, partly funded by federal resources from the National Institute of Biomedical Imaging and Bioengineering (NIBIB), NIH, marks a pivotal stride towards enhancing diagnostic accessibility. It resonates profoundly with AegirBio’s overarching mission—to pioneer biomarker testing technologies that empower individuals to monitor their health non-invasively, thereby augmenting the efficacy of treatment outcomes. Furthermore, the project serves as a testament to the innovation inherent in AegirBio’s existing saliva testing platform. Its’ successful execution not only underscores the Company’s commitment to innovation but also positions it for potential additional funding opportunities into Workplan 2, contingent upon the satisfactory completion of Workplan 1 objectives. In light of these developments, the acquisition of a loan facility is imperative to ensure the uninterrupted progress of AegirBio’s initiatives. The facility will serve to secure sustained funding for the Company’s activities, including the pivotal RADx® Tech project conducted under the auspices of the National Institutes of Health (NIH).

The board’s considerations

Prior to the decision to enter into the Loan Facility and change the terms of the existing Convertible Bonds, the Company’s board of directors has, together with a financial advisor, carefully investigated the conditions for a rights issue to raise the necessary capital. The board’s assessment is that the Company currently, especially considering that the Company has SEK 40.00 million in outstanding Convertible Bonds that are held by Atlas, cannot meet its’ capital needs in any other way than through the Loan Facility with Atlas. The board of directorshas together with a financial advisor assessed that a rights issue would require significant guarantee commitments from a guarantee syndicate, which has not been deemed possible for the Company to obtain. In addition, a rights issue would probably have been carried out at a significantly lower subscription price than that which Atlas will be able to convert at in accordance with the terms and conditions of the Loan Facility. The board of directors’ overall assessment is thus that the reasons for entering into the Loan Facility and subsequently carrying out directed shares issues to Atlas in this way outweigh the reasons that justify the main rule of issuing shares with preferential rights for existing shareholders, and that share issues with deviation from the shareholders’ preferential rights in accordance with the Loan Facility are thus in the interest of the Company and all shareholders.

The method for calculating the subscription price in the future share issues has, in consultation with a financial advisor and through analysis of the Company’s indebtedness and several market factors, been determined through arm’s length negotiations with Atlas. It is the board of directors’ assessment that the subscription price through this procedure will reflect current market conditions and demand and that it is thereby market-based.

Extraordinary General Meeting

Amendment of the terms and conditions of the Convertible Bonds is subject to the shareholder’ approval. The board of directors intends to convene an extraordinary general meeting within shortly.

Notice of the extraordinary general meeting will be issued as a separate press release.

“This agreement with Atlas Special Opportunities, LLC strengthens our financial position and allows us to continue our development of innovative health technologies such as the RADx® Tech project”, says Anders Ingvarsson, Chairman of the Board of AegirBio.

Advisors
Eminova Partners Corporate Finance AB acts as financial advisor and Moll Wendén Advokatbyrå AB acts as legal advisor in connection with the issuance of the Loan Facility.