Sunclouds, you are correct
Iliad is collecting 10% / year on 28.5 million for 2 years at which point CYDY needs to pay back the $28.5 million. All told, CYDY received $25m and after 2 years will have paid back $34.2m (or ~17% effective interest rate / year on the $25m), assuming no prepayment.
CYDY can prepay, starting 1/29/21 (6 months from loan date), at a 15% premium to what remains on the Note.
Iliad has the option to convert any portion (or all) of the Note into CYDY shares at $10/share, also starting 1/29/21 (I believe). As Sunclouds stated, if another offering is done < $10, the share conversion price is reduced to match (aka "full-ratchet anti-dilution protection"
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I don't have enough experience with these arrangements to determine if the terms were better, worse, or inline with industry avg's for a non-revenue producing biotech. My guess is inline.
I also don't know if a conversion price of 2x the share price at the time is better, worse, or inline with the typical conversion price arrangement. My guess is better...perhaps CYDY was willing to pay more interest to minimize share dilution by raising the conversion price....perhaps if they negotiated a lower interest rate it would have been accompanied by a lower conversion price.
If someone has experience with these arrangements and can offer an opinion on the terms, I'm all ears.
Eventually if things work out, CYDY will have a lot more flexibility in how they go about securing working capital.
Iliad is collecting 10% / year on 28.5 million for 2 years at which point CYDY needs to pay back the $28.5 million. All told, CYDY received $25m and after 2 years will have paid back $34.2m (or ~17% effective interest rate / year on the $25m), assuming no prepayment.
CYDY can prepay, starting 1/29/21 (6 months from loan date), at a 15% premium to what remains on the Note.
Iliad has the option to convert any portion (or all) of the Note into CYDY shares at $10/share, also starting 1/29/21 (I believe). As Sunclouds stated, if another offering is done < $10, the share conversion price is reduced to match (aka "full-ratchet anti-dilution protection"
. I don't have enough experience with these arrangements to determine if the terms were better, worse, or inline with industry avg's for a non-revenue producing biotech. My guess is inline.
I also don't know if a conversion price of 2x the share price at the time is better, worse, or inline with the typical conversion price arrangement. My guess is better...perhaps CYDY was willing to pay more interest to minimize share dilution by raising the conversion price....perhaps if they negotiated a lower interest rate it would have been accompanied by a lower conversion price.
If someone has experience with these arrangements and can offer an opinion on the terms, I'm all ears.
Eventually if things work out, CYDY will have a lot more flexibility in how they go about securing working capital.
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