Xtant Medical Holdings, Inc. (NYSE American: XTNT), a global
medical technology company focused on surgical solutions for the
treatment of spinal disorders, today announced that it has entered
into a Restructuring and Exchange Agreement with the lenders under
its credit facility pursuant to which the parties agreed to take
certain actions to restructure Xtant’s outstanding indebtedness,
including the exchange of certain indebtedness outstanding under
the facility, together with accrued and unpaid interest thereon,
into shares of Xtant common stock.
The primary purpose of the restructuring is to improve Xtant’s
capital structure by reducing its outstanding debt, which the
Company expects will facilitate future access to capital markets
for investment in its growth initiatives, and provide a path to
possibly regain compliance with the NYSE American continued listing
standards.
“We are pleased to have signed this agreement with our lenders,
which are affiliated with OrbiMed Advisors LLC, who currently hold
all of our outstanding indebtedness under our credit facility and
over 70% of our outstanding common stock. The completion of
this restructuring will significantly reduce Xtant’s total
indebtedness leaving less than $17 million drawn under our credit
facility post-transaction, lower our cost of debt to more
serviceable levels, and allow us to focus on further improving the
Company’s operating model and growth profile. Our
restructured balance sheet, combined with our recently announced
cost saving measures, will allow management to place even greater
attention on our mission of ‘honoring the gift of donation, so that
our patients can live as full a life as possible,’” said Sean
Browne, President and CEO of Xtant Medical.
The restructuring transactions contemplated under the
Restructuring and Exchange Agreement include, among others:
- an amendment to Xtant’s charter to increase the number of
authorized shares of common stock from 75 million to 300
million;
- the exchange by Xtant of shares of common stock for
approximately $40.8 million of the aggregate outstanding principal
amount of the loans outstanding under the credit agreement, as well
as, without duplication, approximately $21.1 million of the
outstanding amount of PIK Interest (as defined in the credit
agreement) (such loans and PIK Interest, referred to as the
“exchanging loans”), plus all other accrued and unpaid interest on
the exchanging loans outstanding as of the closing date, at an
exchange price of $1.07 per share, representing the average closing
price of the common stock over the 10 trading days immediately
prior to the parties entering into the Restructuring and Exchange
Agreement, and resulting in the issuance of approximately 57.8
million shares of Xtant common stock to the lenders;
- the execution of an amendment to the credit agreement by the
parties thereto to change certain provisions therein, including
extinguishing loans in an aggregate principal amount equal to the
exchanging loans outstanding thereunder together with all accrued
and unpaid interest thereon, adding loans in an aggregate principal
amount equal to the prepayment fee payable thereunder in respect of
the exchanging loans, reducing the amount of credit availability
thereunder, reducing the interest rate and eliminating certain
financial covenants; and
- the launch by Xtant of a rights offering to allow stockholders
of the Company to purchase up to an aggregate of $15 million of
Xtant common stock at the same price per share as the $1.07 per
share exchange price used to exchange the exchanging loans into
common stock.
Immediately after the signing of the Restructuring and Exchange
Agreement, Xtant solicited and obtained the written consent of
OrbiMed Royalty Opportunities II, LP and ROS Acquisition Offshore
LP, the holders of an aggregate of approximately 9.25 million
shares of common stock, representing a majority of the outstanding
shares of Xtant common stock as of the record date, August 7, 2020,
for the approval of the charter amendment and the share issuance.
The written consent of these two stockholders was sufficient to
approve the charter amendment and the share issuance. Therefore, no
proxies or additional consents will be solicited by Xtant in
connection with the transaction.
Pursuant to applicable federal securities and corporate laws,
Xtant intends to file an information statement with the Securities
and Exchange Commission and send it to all holders of its common
stock as of August 7, 2020 for the purpose of informing such
stockholders of the written actions taken by the two consenting
stockholders. In accordance with applicable federal securities
laws, the stockholder consent of the two consenting stockholders
will become effective no sooner than 20 calendar days following the
mailing of the information statement. After the expiration of this
20-day period, Xtant intends to file the charter amendment with the
Secretary of State of the State of Delaware and, immediately
thereafter, issue the 57.8 million shares of common stock to the
lenders in exchange for the exchanging loans. After completion of
that transaction, Xtant intends to commence a rights offering to
provide all stockholders as of a record date to be determined at a
future date the opportunity to purchase Xtant common stock at the
same price per share as the $1.07 exchange price used in the debt
restructuring.
“The Board, as well as our controlling stockholder, OrbiMed, are
cognizant of the significant dilution that will result from the
completion of the debt restructuring, which may be alleviated to
some extent by the subsequent rights offering that we intend to
launch thereafter,” continued Mr. Browne. “As a management team, we
are anxious to put the NYSE American compliance issue and debt
restructuring behind us so that we can continue to focus on
providing critical spinal surgical solutions to patients in need,
developing the commercial spine market and improving our overall
operational efficiencies.”
About Xtant Medical Holdings, Inc.
Xtant Medical Holdings, Inc. (www.xtantmedical.com) is a global
medical technology company focused on the design, development, and
commercialization of a comprehensive portfolio of orthobiologics
and spinal implant systems to facilitate spinal fusion in complex
spine, deformity and degenerative procedures. Xtant people are
dedicated and talented, operating with the highest integrity to
serve our customers.
The symbols ™ and ® denote trademarks and registered trademarks
of Xtant Medical Holdings, Inc. or its affiliates, registered as
indicated in the United States, and in other countries. All other
trademarks and trade names referred to in this release are the
property of their respective owners.
Additional Information
As mentioned above, Xtant intends to file an information
statement with the Securities and Exchange Commission (SEC) for the
purpose of informing its stockholders of the written actions taken
by OrbiMed Royalty Opportunities II, LP and ROS Acquisition
Offshore LP. The Company’s stockholders are urged to read the
information statement when it becomes available and any other
relevant documents filed with the SEC, as well as any amendments or
supplements to those documents, because they will contain important
information. A free copy of the information statement, as well as
other filings with the SEC containing information about the Company
and the restructuring transactions, may be obtained, when
available, at the SEC’s website at www.sec.gov. Copies of the
information statement may also be obtained, when available, without
charge, by calling the Company at (406) 388-0480 or sending your
request in writing to the Company at the following address: 664
Cruiser Lane, Belgrade, Montana 59714, Attention: Investor
Relations.
Cautionary Statement Regarding Forward-Looking
Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. Forward-looking statements include statements that are
predictive in nature, that depend upon or refer to future events or
conditions, or that include words such as “expects,” “anticipates,”
“intends,” “plans,” “believes,” “continue,” “future,” “will,”
“may,” “continue,” similar expressions or the negative thereof, and
the use of future dates. Forward-looking statements in this release
include the Company’s expectations regarding the timing, effect and
benefits of the restructuring transactions and its compliance with
the continued listing standards of the NYSE American. The Company
cautions that its forward-looking statements by their nature
involve risks and uncertainties, and actual results may differ
materially depending on a variety of important factors, including,
among others: risks and uncertainties surrounding the restructuring
transactions, including without limitation, the Company’s ability
to consummate the restructuring transactions and to do so on a
timely basis and its ability to maintain the listing of its common
stock on the NYSE American; the effect of the COVID-19 pandemic on
the Company’s business, operating results and financial condition;
the Company’s future operating results and financial performance;
the ability to increase or maintain revenue; the ability to remain
competitive; the ability to innovate and develop new products; the
effect of management changes and the ability to engage and retain
qualified personnel; government and third-party coverage and
reimbursement for Company products; the ability to obtain and
maintain regulatory approvals and comply with government
regulations; the effect of product liability claims and other
litigation to which the Company may be subject; the effect of
product recalls and defects; the ability to obtain and protect
Company intellectual property and proprietary rights and operate
without infringing the rights of others; the ability to service
Company debt, comply with its debt covenants and access additional
indebtedness; the ability to obtain additional financing and other
factors. Additional risk factors are contained in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2019
filed with the SEC on March 5, 2020, as supplemented by subsequent
disclosures in the Company’s Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2020 and in future Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K. Investors are
encouraged to read the Company’s filings with the SEC, available at
www.sec.gov, for a discussion of these and other risks and
uncertainties. The Company undertakes no obligation to release
publicly any revisions to any forward-looking statements to reflect
events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events, except as required by law. All
forward-looking statements attributable to the Company or persons
acting on its behalf are expressly qualified in their entirety by
this cautionary statement.
Investor Relations Contact
David CareyLazar FINNPh: 212-867-1762Email:
david.carey@finnpartners.com
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