FUSION PHARMACEUTICALS INC. : Entering into a Material Definitive Agreement, Creation of a Direct Financial Obligation or Obligation Under an Off-Balance Sheet Arrangement of a Registrant, Unregistered Sale of Equity Securities, Other Events (Form 8-K )

Section 1.01 Entering into a Material Definitive Agreement.

At April 4, 2022, Fusion Pharmaceuticals Inc. (the “Company”) entered into a loan and guarantee agreement (the “Loan Agreement”) with Oxford Finance LLC, as collateral agent and lender (the “Lender”). The lender has agreed to make available to the company term loans in an aggregate principal amount of up to $75.0 million under the loan agreement. The Company expects to use the proceeds from the term loans for working capital and general corporate purposes. The loan agreement provides for a term loan commitment of $50.0 million into two potential tranches: (i) a $25.0 million Term Loan Facility A, with $10.0 million financed on the closing date and the balance $15.0 million be funded at the request of the Company on a one-time basis at any time prior to April 4, 2023 and (ii) a
$25.0 million Term loan B to be financed at the request of the Company, subject to compliance with certain conditions, no later than June 30, 2023. These two term loans have a maturity date of April 1, 2027. The Loan Agreement also provides access to an additional Term Loan Facility C in the amount of
$25.0 millionto be financed at the sole discretion of the lender.

Borrowings under the three loan facilities bear interest at a variable annual rate equal to the greater of (i) 8.00% and (ii) the sum of (a) the greater of (x) 1 month LIBOR rate and (y) 0.10% plus (b) 7.90%. The Company is authorized to make interest only payments on any amounts outstanding under the Term Loans through June 1, 2025after which the principal will also be repaid according to an amortization schedule.

The Company is required to pay a final charge equal to 4.00% of the total amount of term loans funded, on the earliest of the following dates: (i) the maturity date, (ii) the acceleration of the term loans , and (iii) early repayment of term loans. The Company has the option to prepay all, but not less than all, of the outstanding principal balance of the Term Loans pursuant to the Loan Agreement. If the Company prepays all or part of the term loans before the maturity date, it is required to pay the Lender a prepayment commission based on a percentage of the unpaid principal balance of the loans, equal to 3% if payment occurs on or before 12 months after the funding date of the applicable loan, 2% if prepayment occurs more than 12 months after, but no later than 24 months after, the funding date of the applicable loan, or 1% if the prepayment occurs more than 24 months after, but no later than 36 months after, the funding date of the applicable loan, and no prepayment charge is required thereafter.

The Company’s obligations under the Loan Agreement are secured by a first ranking charge on substantially all of its assets.

The Loan Agreement contains customary representations, warranties and covenants and also includes customary events of default, including default of payment, breach of covenants, change of control and default of material adverse change. For the purposes of making certain investments and entering into certain licenses, the Company is required to maintain cash flow equal to 9 months (or, after funding of Term Loans B, 12 months) of cash flow. Upon the occurrence of an event of default, an additional late payment interest rate of 5.00% per annum may be applied to the outstanding loan balances, and the lender may declare all outstanding obligations immediately due and payable and exercise all of its rights and remedies as set forth in the Loan Agreement and under applicable law, including, without limitation, termination of its obligations to extend credit to the Company.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under a

Off-balance sheet arrangement of a registrant.

The information provided in Section 1.01 of this Current Report on Form 8-K is incorporated by reference into this Section 2.03.

Item 3.02 Unrecorded Sales of Equity securities.

In connection with the Loan Agreement and the financing of Term Loan Facility A, the Company issued to the lender warrants (the “Initial Warrants”) to purchase an aggregate of 26,110 common shares of the company, equivalent to 2.00% of the initial capital $10.0 million funded by Term Loan Facility A divided by the strike price of $7.66. The Company is required to issue additional warrants (the “Additional Warrants”) to the lender within the

————————————————– ——————————

if the remainder of Term Loan Facility A, Term Loan Facility B and/or Term Loan Facility C is funded. The additional warrants will also be equal to 2.00% of the financed term loan. The additional warrants are exercisable at the option of the holder and the exercise price will be the lesser of (a) the 10-day moving average of the market price of the common stock of the Company, as determined at the close of the day immediately preceding the financing date of the respective term loan, and (b) the market price of the common stock of the Company, as determined at the close of business on the business day immediately preceding the financing date of the respective term loan . Each warrant will expire ten years from the date of its initial issue.

The issuance of the Initial Warrants was exempt from registration under the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof as a transaction by an issuer n not involving a public offering.

The foregoing description of the terms of the Initial Warrants, Additional Warrants and Loan Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Warrants and Loan Agreement, copies of which will be filed with the Security and Exchange Commission as attachments to the company’s quarterly report on Form 10-Q for the three months ending June 30, 2022.

Section 8.01 Other Events

With the addition of Term Loan Facility A, the Company expects its cash, cash equivalents and investments from December 31, 2021 will allow the Company to finance its operations until the first quarter of 2024.

————————————————– ——————————

© Edgar Online, source Previews

About Julius Southworth

Check Also

Comvest Credit Partners leads the refinancing of SMART

WEST PALM BEACH, Fla., June 08, 2022 (GLOBE NEWSWIRE) — Comvest Credit Partners (“Comvest”), a …