(Alliance News) - Motif Bio PLC on Tuesday said it has signed a loan amendment and release agreement with Hercules Capital Inc, moving closer to a corporate restructure and loan settlement.
Shares in Motif Bio were down 28% at 0.17 pence in London, where it is headquartered, in late morning trade.
Under the Hercules agreement, Hercules is relinquishing the loan guarantee provided by Motif Bio, meaning Motif Bio is free of any future obligations to Hercules relating to the 2017 loan from Hercules to Motif Bio subsidiary Motif Inc.
Motif Inc is Motif Bio's US subsidiary and owner of its assets related to listeria-fighting drug iclaprim. In exchange for the relinquishment, Motif Inc has given Hercules a perfected security interest in the entirety of its intellectual property.
In order to facilitate Motif Inc's wind down and the possible sale of its iclaprim-related assets, Hercules has agreed "to certain forbearance provisions under the loan agreement through to June 2020" with Motif Inc.
As such, provisions relating to the pledge of Motif Bio's interest in Motif Inc are to become effective by May 10 while the other terms of the Hercules agreement are effective immediately. May 10 is around 100 days after Hercules's security interest in Motif Inc's intellectual property is perfected. This may be altered if Motif Bio or Motif Inc file for bankruptcy, whether voluntarily or not.
As agreed at Motif Bio's general meeting, the company will grant Hercules warrants over a total of 121.3 million ordinary shares, representing 25% of its outstanding share capital. These expire January 2021 and have a 0.42 pence per share exercise price.
Motif Inc, meanwhile, has ceased all operations and brought on Tamarack Associates to help facilitate the sale of iclaprim and its other assets. So far, no transaction is pending for the sale of Motif Inc's assets, with "no assurance that there will be a transaction to monetise the assets".
Motif Inc's Graham Lumsden has resigned as director and has forfeited his outstanding vested and non-vested options. John Palmer of Tamarack Associates and Bernadette Barron of Barron Business Consultants have been appointed sole executive officer and sole independent non-executive officer of Motif Inc respectively.
With the Hercules agreement executed, Motif Bio will become a cash shell and the company must make an acquisition under AIM rules within six months of have its share suspended from trading.
"The company's directors are focused on sourcing an appropriate reverse takeover candidate for Motif Bio. There is no assurance that the effort will be successful to source and/or complete a reverse takeover transaction. The company's directors will provide shareholders with further updates as appropriate," said Motif Bio.
By Anna Farley; annafarley@alliancenews.com
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