Aegros Limited proposes to issue debentures in a series of tranches up to an aggregate face value of AUD25 million for subscription by investors

SYDNEY, March 13, 2024 /PRNewswire/ — Aegros Limited ACN 618 589 101 (the Issuer) proposes to issue debentures (in the form of loan notes) in a series of tranches up to an aggregate face value of AUD25 million of (Debentures) for subscription by investors (Investors). The Issuer will invest the proceeds of calls to be made under the Debentures to fund eligible non-equipment research and development expenditure under the Australian Government’s Research and Development Tax Incentive program and in the development of a biotechnology facility in Australia.

The Issuer is part of the Aegros Group, a leading biotechnology company developing better and more sustainable products to treat life threatening diseases.

The Debentures will typically be on more flexible lending terms than loan terms offered by the mainstream banks and thereby aim to achieve an enhanced return for the Investors.

The Debentures will be provided under the following tranches:

Tranche 1A: AUD10,000,000;
Tranche 1B: AUD5,000,000;
Tranche 2: AUD10,000,000,

and with a facility term up to 12-months.

Investors will earn 16.00% p.a. payable on drawn balances, calculated daily and paid monthly in arrears.

The Debentures will only be available to Investors who qualify as ‘wholesale clients’ for the purposes of section 761G of the Corporations Act 2001 (Cth) (Act). The Issuer has appointed FC Funds Management Pty Limited ACN 161 055 152 (AFSL 431245) (FC Capital) as its intermediary under section 911A(2)(b) of the Act for the purposes of FC Capital making offers to Investors to arrange for the issue, variation or disposal of the Debentures. The Issuer may only issue, vary or dispose of such Debentures in accordance with such offers, provided they are accepted.

FC Capital is a leading alternative asset management firm based in Australia with expertise in private credit and specialty real estate and has provided unique investment offerings to wholesale and sophisticated investors in Australia, Asia, North America and Europe for over 12 years.

The Issuer is seeking expressions of interest from prospective Investors for participation in the proposed Debenture issue to be undertaken in early to mid-2024.

A summary of the proposed Debenture issue is provided below.

For expressions of interest and further information, interested Investors are invited to contact Kieran McKee on +61 2 9072 9474 or at [email protected]. Interested Investors should also notify the scale of their prospective interest in the Debenture issue and any terms / conditions required in relation to that prospective investment.

The information provided in this Request for Expressions of Interest is general information only and does not take into account the investment objectives, financial situation or particular needs of any Investor or potential Investor. Persons considering acquiring Debentures should obtain independent advice tailored to their personal circumstances before making any investment decision in relation to the Debentures. The Issuer has been appointed by FC Capital as its corporate authorised representative under its Australian Financial Services Licence (AFSL) for the purposes of issuing this Request For Expression of Interest. The Issuer does not hold an AFSL and is not itself licensed to provide financial product advice in relation to an investment in Debentures. Investors considering making an investment in Debentures should read this document carefully before making a decision to acquire Debentures. No cooling off rights apply in relation to the issue of Debentures.

Summary of the Proposed Debenture Issue

Parties
The Issuer / Borrower	Aegros Limited
Guarantors	Aegros Therapeutics Pty Limited ACN 003 131 548 Aegros Engineering Pty Limited ACN 623 563 100 Aegros Membranes Pty Limited ACN 624 585 299 Aegros Advanced Adhesives Pty Ltd ACN 670 911 403 and all subsequently established subsidiaries of the Borrowers subject to a 95% EBITDA and 95% Total Assets Guarantor Coverage test.
Group	All Borrowers, Guarantors, and subsidiaries of Aegros Limited.
The Arranger	FC Funds Management Pty Limited ACN 161 055 152.
Structure
Facility Tranche 1	Senior Secured R&D & Working Capital Facility.
Facility Tranche 2	Senior Secured R&D & Working Capital Accordion Facility.
Security Ranking	The Facility will be first ranking senior secured over all Borrowers and all subsidiaries subject to a 95% EBITDA and 95% Total Assets Guarantor Coverage test.
Facility Limit	AUD25,000,000 (twenty-five million dollars).
Tranche 1 Limit	AUD15,000,000 (fifteen million dollars).
Tranche 1A Sub-Limit	AUD10,000,000 (ten million dollars).
Tranche 1B Sub-Limit	AUD5,000,000 (five million dollars).
Tranche 2 Limit	AUD10,000,000 (ten million dollars).
Facility Term	12 months from first drawdown.
Financial Close	The date upon which all Conditions Precedent are met or waived by the Investors at their absolute discretion.
Purpose	To fund accrued non-equipment R&D Tax Offset Refunds (R&DTOR) available to the Borrower from the Australian Tax Office (ATO) and fund the completion of the HaemaFrac ® facility at 6 Eden Park Drive, Macquarie Park, NSW 2113, Australia.
Facility Currency	Investors may elect to provide their commitments in either AUD or USD with formal documentation to incorporate relevant mechanisms and may include provision to the Borrower of both AUD and USD tranches.
Facility Tranche 2 Mechanism	The Borrower must in the first instance approach existing Investors to provide the Tranche 2 Facility on the same terms and conditions as Facility Tranche 1. The existing Investors will have 4 weeks to provide credit approvals to the Borrower. If Investors do not provide approvals within this timeframe, the Borrower may approach new Investors to provide the facility.
Borrowing Base	Availability is subject to the Borrowing Base calculated as follows: A – (B + C) + D + E = F A = 85% of the non-equipment R&DTOR which has been accrued but not yet received as detailed in the Review Letter. B = Current outstanding of the Facility C = Any clawback amount advised by the ATO or taxes otherwise due to the ATO. D = Orderly Liquidation Value of Property, Plant & Equipment per the Valuation Report E = 5% of the total Share Capital as at the date of the Utilisation Request F = The amount available for drawdown.
Availability	Available for drawdown until 30^th September 2024 subject to Conditions Precedent to Drawdown and the Borrowing Base being satisfied.
Drawdown	Tranche 1A is to be fully drawn at Financial Close. Tranche 1B is subject to the Borrower raising an additional USD$5 million minimum equity capital by 31^st March 2024. Tranche 2 is subject to the Borrower raising an additional USD$15 million by 30^th June 2024.
Repayment	The Borrower may repay the Facility upon giving no less than 2 Business Days’ notice. Any repayment shall be subject to a minimum of AUD1,000,000.
Cancellation	All repayment amounts will be a cancellation of the Facility Limit and not available for redraw.
Interest & Fees
Arranging Fee	1.00% (plus GST) of the Tranche 1 Limit payable on Financial Close to Investors.
Interest Rate	16.00% per annum payable on drawn balances, calculated daily and paid monthly in arrears.
Unutilised Commitment Fee	2.95% per annum payable to Investors on the undrawn balance of the Tranche 1B Sub-Limit, calculated daily and paid monthly in arrears.
Default Interest	Interest Rate plus 2.00% per month on drawn balances for periods in which an Event of Default is subsisting.
Minimum Earn	The Facility is subject to a minimum earn of 9 months interest on the Tranche 1 Limit (the Minimum Earn doesn’t include any amount received in relation to the Arranging Fee, Work Fee and Due Diligence Fee).
Cessation of Business Fee	If the Borrower ceases business and an administrator or liquidator is appointed, a fee equivalent to 10% of the Facility Limit at the time of appointment will be payable to the Investors and become senior secured debt.
Review Events & Events of Default
Review Events	The occurrence of a Review Event will automatically facilitate a 14-day review and discussion period between the Borrowers and Investors. If at the end of this 14-day period, the Investors acting reasonably are not satisfied with the outcome of these discussions, they may declare all monies due and payable subject to a notice period of 7 days.
Events of Default	The occurrence of an Event of Default, subject to remedy period of 10 Business Days where the breach is capable of remedy, will entitle the Investors to declare that the amounts owing are immediately due and payable and/or its obligations under the Facility are terminated.
Security & Documentation
Security	First ranking General Security Agreement (GSA) over all Borrowers and all subsidiaries. For the avoidance of doubt, this includes a charge or control over the Payment Account; Mortgage of Lease over the property at 6 Eden Park Drive, Macquarie Park, NSW 2113, Australia; Consent to Mortgage of Lease over the property at 6 Eden Park Drive, Macquarie Park, NSW 2113, Australia; and Directors’ fraud indemnity.
Conditions
Condition(s) Precedent	The following conditions are to be met ahead of completion. Satisfactory due diligence Perfected GSA over the Borrower, Guarantors, and subsidiaries Entry in final Facility Agreement and security documents.
Condition(s) Precedent to each drawdown	The following conditions are to be met ahead of each drawdown: no Events of Default, potential Event of Default or Review Event is in subsistence.
Others
Other matters	The legal documentation will include other issues not covered above that are normal for lending facilities of this type, including but not limited to: Representations and warranties Positive and negative undertakings; and Rights for the Investor to syndicate or assign some or all of the Facility to a third-party.
Governing Law	New South Wales, Australia.

Source : Aegros Limited proposes to issue debentures in a series of tranches up to an aggregate face value of AUD25 million for subscription by investors

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