Item 1.01. Entry into a Material Definitive Agreement
The information set forth below in Item 1.03 of this Current Report on Form 8-K (this “Form 8-K”) regarding the DIP Facility is incorporated herein by reference. All capitalized terms not otherwise defined in this Item 1.01 shall have the meaning provided in Item 1.03.
Item 1.03 Bankruptcy or Receivership
Bankruptcy Filing
On February 10, 2025 (the “Petition Date”), Omega Therapeutics, Inc. (the “Company” or “Debtor”) commenced a chapter 11 case (the “Chapter 11 Case”) as debtor in possession in a voluntary proceeding under Chapter 11 of the United States Code, 11 U.S.C. §§ 101-1532, as amended from time to time (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). The Company currently remains in possession of its assets and currently continues to operate its business as a “debtor in possession” under the jurisdiction of the Bankruptcy Court, and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court.
Postpetition Debtor-in-Possession Financing
In connection with the Chapter 11 Case, the Debtor filed various “first day” motions seeking Bankruptcy Court approval. On February 11, 2025, the Bankruptcy Court approved, among other things, the Company’s debtor-in-possession financing on the terms set forth in the Interim Order (I) Authorizing the Debtor to (A) Obtain Postpetition Financing and (B) Utilize Cash Collateral, (II) Granting Adequate Protection to the Prepetition Lender, (III) Modifying the Automatic Stay, (IV) Scheduling a Final Hearing, and (V) Granting Related Relief (Docket No. 44) (the “Interim Order”) and the Superpriority DIP Term Sheet, dated February 10, 2025 (together with all exhibits and schedules thereto, the “DIP Term Sheet” and, together with the Interim Order, the Final Order and the DIP Budget (each as defined in the Interim Order), and any other schedules, exhibits, agreements, instruments, pledge agreements, guarantees, security agreements, intellectual property security agreements, control agreements, escrow agreements, instruments, notes, and documents executed in accordance and connection with any of the foregoing; each as amended, restated, supplemented, waived, or otherwise modified from time to time in accordance with the terms thereof, the “DIP Documents”)) with Pioneering Medicines 08-B, Inc. (the “DIP Lender”), an affiliate of Flagship Pioneering, Inc. (“Flagship Pioneering”), and certain funds affiliated with Flagship Pioneering that, collectively, are significant stockholders of the Company.
The Bankruptcy Court authorized the Company to obtain postpetition financing on a senior secured superpriority basis (the “DIP Facility”) from the DIP Lender, comprised of: (i) a new money delayed-draw term loan facility (the “New Money DIP Loans”) in an aggregate principal amount of $9,820,908 of which $3,931,953 was made available to the Company on February 13, 2025; and (ii) a roll-up (the “Roll-Up” and together with the New Money DIP Loans, the “DIP Loans”) of the obligations arising under that certain Secured Promissory Note, dated as of February 3, 2025 (the “Prepetition Note”) equal to the sum of outstanding principal (plus accrued and unpaid interest) under the Prepetition Note and any unreimbursed costs, fees, expenses and indemnities in accordance with the Prepetition Note Documents (as defined in the Interim Order) in the amount of $1,475,178 plus $165,000 in fees and expenses, in each case, pursuant to the terms and conditions set forth in the Interim Order, the DIP Budget, and the DIP Term Sheet. Subject to the DIP Documents, the DIP Facility is secured by first-priority, senior liens on substantially all of the Debtor’s assets, subject only to certain permitted prior liens and a professional fee carve-out as further provided for in the Interim Order.