On December 16, 2022 OSE Immunotherapeutics reported a €10 million drawdown corresponding to the second tranche of the financing granted by the European Investment Bank (EIB) (Press release, OSE Immunotherapeutics, DEC 16, 2022, View Source [SID1234646947]). The finance contract was signed on February 12, 2021.

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After the drawdown of the first tranche in July 20211 , the Company had an option to access further 10 million euros, subject to the achievement of certain milestones. Following the achievement of those milestones, the Company wishes to reinforce its financial position until Q3 2023 by drawing on the second tranche of the facility, to finance its preclinical and clinical programs.

This second tranche will carry a fixed interest of 5% per year paid annually, with a maturity of five years.

The second tranche is linked to the issuance of warrants to the EIB giving right, in the event of exercise, to the subscription of 550,000 shares of the Company (i.e., 2.97% of the share capital on an undiluted basis). Warrants are not the subject to an application for admission to trading on any market.
The subscription price is €0.01 per warrant, i.e., €5,500.

In order to limit the dilutive impact and except in the event of the occurrence of an early exercise event (notably a change of control, including the loss of a significant holding by the current management shareholders, or other events of default, including a significant change in the current governance not approved by the EIB), the warrants will only be exercisable from 16 December 2027, i.e. five years from the drawdown of the relevant tranche and at the latest at the end of a period of twelve years following their issue (i.e. 16 December 2034).

The subscription price for the new shares upon exercise of the warrants was set at 7.19 euros per share, i.e. corresponding to the volume-weighted average of the three trading days preceding the pricing, without discount.

In accordance with the warrant agreement, as with the first tranche, the EIB has an anti-dilution clause allowing it to benefit from additional warrants, in the event of a capital increase of the Company at a price less than €20 per share, after application of a deductible on the first 1,500,000 shares to be issued. In such a case, the Company would have to allocate additional warrants to the EIB allowing it to remain at a potential capital level of 2.97% (corresponding to its theoretical holding percentage post-allocation of these 550.00 warrants and exercise of these warrants subscribed in the context of the second tranche of funding).

The shares to be issued upon exercise of the warrants will be subject to an application for admission to trading on Euronext Paris. On the basis of 550,000 new Company’s shares issued upon exercise of all the warrants at a price of 7.19 euros per new share, the gross proceeds of the issue, issue premium included, will amount to 3,954,500 euros, thereby strengthening the Company’s equity.

On 16 December 2027, the EIB has the option to ask the Company to buy back its warrants at market value (less the exercise price of the warrants) up to a maximum of 15 million euros provided that the Company retains a cash level of at least 10 million euros. Otherwise, the EIB’s put option will be exercised on a number of warrants allowing the Company to maintain a cash level of 10 million euros. This put option also applies in the event of a change of control, understood as the holding of more than 33% of the capital or the taking of control by a third party (other than the current key managers). The Company may substitute an existing shareholder or a third party to buy back these warrants at market value. The Company has a call option allowing it to buy back the EIB warrants at market value (less the exercise price of the warrants) in the event of a public offer by a third party resulting in the exit of the management shareholders, for a period of one month following such exit. The Company also has a right of first refusal allowing it to buy back the EIB’s warrants if the latter wishes to sell them to a third party.

Following the drawdown of this second tranche, the financial debt amounts to 26 M€.