VIV:CC - Avivagen Inc. (VIVXF)(VIV:CA) - A Debt for a Debt
The New Offering. Avivagen's management announced yesterday the intention to complete a private placement financing of secured debentures. The gross proceeds of this financing will total up to CAD$6.5 million and will close on March 28, 2022. Bloom Burton Securities is acting as the agent in the offering. Details on the Offering. The debentures will have an annual interest rate of 9%, payable semi annually, and the purchasers will be paid a maintenance fee of 3%. Purchasers of the debentures will also receive common shares equal to 20% of the principal amount of the debentures divided by the market price of the shares on the TSX Venture Exchange on the last trading day prior to closing. These are close to the prior debentures that the Company is now paying off, with those having a 10% interest rate, payable quarterly, and a 2% maintenance fee.Use of Debt. The new financing will be used to pay off approximately CAD$5.46 million of debentures issued by Avivagen in March and April of 2019, while the rest will be used for working capital and general corporate purposes. We believe the extra CAD$1 million will be used towards satisfying government regulations of their OxC-beta technology for further expansion into more countries.Focus on Strategy. Now that Avivagen has refinanced its largest debt holding for another 2 years, we believe that the Company's focus is now on expansion of its OxC-beta technology across new countries. We are still remaining hopeful that approval in China will happen this new year, with the United States not far behind, as the Company is aggressively trying to meet the approval standards of each country.Maintaining Outperform. We are maintaining our Outperform rating and US$1.00 12-month price target. Avivagen is an early-stage revenue company focused on developing and commercializing products for livestock, companion animals, and humans. We believe the Company is at an inflection point with significant sales increases just around the corner and presents a favorable risk/reward proposition. Read More >>