Mesoblast Limited (ASX:MSB; Nasdaq:MESO), a global leader in allogeneic cellular medicines for inflammatory diseases, has announced it has entered into convertible note subscription agreements for a potential US$50 million issuance. The agreement is with SurgCenter principals and existing Mesoblast shareholders, Gregory George and William Gueck. The unsecured convertible notes are available at Mesoblast’s discretion, pending shareholder approval, and could be used to repay existing debts or for general working capital.
According to Mesoblast, the issuance is subject to shareholder approval at the upcoming Annual General Meeting (AGM). The company may issue up to US$50 million of unsecured convertible notes in tranches of US$10 million. The notes will mature five years after the first issuance, unless redeemed or converted earlier. Investors can convert the notes into fully paid ordinary shares or ADRs at a price of US$16.25 per ADR, or A$2.50 per ASX-listed share. This conversion price represents a 126% premium to Mesoblast’s last closing price on Nasdaq and a 29% premium to its last closing price on the ASX. The convertible notes will have a coupon rate of 5% per annum.
As consideration for the agreement, the investors will receive a commitment fee of US$100,000. Subject to shareholder approval, they will also receive 2 million warrants over ordinary shares for entering into the convertible note option, and a further 3 million warrants should Mesoblast exercise the option. The warrants will have the same exercise price as the conversion price of the notes and a maturity date of four years from the date of first issuance.
Mesoblast is a world leader in developing allogeneic (off-the-shelf) cellular medicines for the treatment of severe and life-threatening inflammatory conditions. Their therapies use mesenchymal lineage cell therapy technology to release anti-inflammatory factors that modulate the immune system.
