Verastem, Inc. (NASDAQ: VSTM) (the “Company”) today announced
that it has entered into privately negotiated agreements among the
Company and a limited number of investors who are accredited
investors (within the meaning of Rule 501 promulgated under the
Securities Act of 1933, as amended (the “Securities Act”)) and/or
qualified institutional buyers (as defined in Rule 144A under the
Securities Act) who are holders of the Company’s existing 5.00%
convertible senior notes due 2048 (the “existing notes”) to
exchange approximately $114.3 million aggregate principal amount of
existing notes for (i) approximately $62.9 million aggregate
principal amount of newly issued 5.00% convertible senior second
lien notes due 2048 (the “exchange notes”) and (ii) an aggregate of
approximately $11.6 million in cash (such transactions,
collectively, the “exchange”). For each $1,000 principal amount of
existing notes being exchanged, the Company will deliver to the
exchanging investor $550 principal amount of exchange notes and a
cash payment of $100, together with accrued and unpaid interest on
the existing notes (plus, if applicable, an adjustment in lieu of
issuing fractional exchange notes). The exchange is expected to
close on November 14, 2019, subject to customary closing
conditions. The Company will not receive any cash proceeds from the
exchange.
The exchange notes will be issued pursuant to an indenture by
and between the Company and Wilmington Trust, National Association
(the “indenture”). After giving effect to the issuance of the
exchange notes and the exchange of the existing notes pursuant to
the exchange, approximately $62.9 million aggregate principal
amount of the exchange notes is expected to be issued and
outstanding and approximately $35.7 million aggregate principal
amount of the existing notes is expected to remain issued and
outstanding.
The exchange notes will be senior secured obligations of the
Company and pay interest semiannually in arrears at a rate of 5.00%
per annum on May 1 and November 1 of each year, beginning on May 1,
2020. The exchange notes will mature on November 1, 2048 (the
“maturity date”), unless earlier converted, redeemed or repurchased
by us, and will be secured by a second lien on the assets of the
Company securing indebtedness issued under its existing senior
secured credit facility. The exchange notes will be convertible at
the option of the holder into shares of common stock of the
Company, par value $0.0001 per share (“common stock”), at any time
prior to the close of business on the scheduled trading day
immediately preceding the maturity date. The conversion rate for
the exchange notes is 606.0606 shares of the Company’s common stock
per $1,000 principal amount of the exchange notes (subject to
certain adjustments), which is equivalent to an initial conversion
price of approximately $1.65 per share, representing an
approximately 52.8% premium to the last reported sale price of
$1.08 per share of common stock on November 11, 2019, as reported
on the Nasdaq Global Market.
Upon conversion of the exchange notes, holders will receive a
cash payment equal to the accrued and unpaid interest on the
converted exchange notes. In addition, prior to November 1, 2020,
holders who convert their exchange notes (other than in connection
with the exercise of the Company’s issuer conversion option) will
also be entitled to an interest make-whole equal to the sum of all
regularly scheduled stated interest payments, if any, due on such
exchange notes on each interest payment date occurring after the
conversion date for such conversion and on or before November 1,
2020.
The Company will have the right, exercisable at its option, to
cause all exchange notes then outstanding to be converted
automatically if the volume-weighted average price per share of the
Company’s common stock equals or exceeds 121% of the conversion
price for a specified period of time and certain other conditions
are satisfied.
Prior to November 1, 2022, the Company will not have the right
to redeem the exchange notes. On or after November 1, 2022, the
Company may elect to redeem the exchange notes, in whole or in
part, at a cash redemption price equal to the principal amount of
the exchange notes to be redeemed, plus accrued and unpaid
interest, if any.
Holders of the exchange notes will have the right, at their
option, to require the Company to purchase their exchange notes (i)
on November 1, 2023, November 1, 2028, November 1, 2033, November
1, 2038 and November 1, 2043, or (ii) if a “fundamental change” (as
defined in the indenture) occurs, in each case, at a repurchase
price equal to 100% of the principal amount of the exchange notes
to be repurchased, plus accrued and unpaid interest, if any, to,
but excluding, the applicable repurchase date.
In connection with the exchange, the Company intends to enter
into an amendment to its senior secured credit agreement.
This press release shall not constitute an offer to sell or a
solicitation of an offer to buy the notes or any other securities,
and shall not constitute an offer, solicitation or sale in any
state or jurisdiction in which such an offer, solicitation or sale
would be unlawful.
The offer and sale of the exchange notes or the shares of common
stock issuable upon their conversion have not been registered under
the Securities Act or any state securities laws. The notes and such
shares may not be offered or sold except pursuant to an exemption
from, or in a transaction not subject to, the registration
requirements of the Securities Act and any applicable state
securities laws.
About Verastem, Inc.
Verastem Oncology (Nasdaq: VSTM) is a commercial
biopharmaceutical company committed to the development and
commercialization of medicines to improve the lives of patients
diagnosed with cancer. We are driven by the strength, tenacity and
courage of those battling cancer – single-minded in our resolve to
deliver new therapies that not only keep cancer at bay, but improve
the lives of patients diagnosed with cancer. Because for us, it’s
personal. Our first FDA approved product is now available for the
treatment of patients with certain types of indolent non-Hodgkin’s
lymphoma (iNHL). Our pipeline comprises product candidates that
seek to treat cancer by modulating the local tumor
microenvironment.
Cautionary Note Regarding Forward-Looking Statements
This press release includes forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
that are subject to risks, uncertainties and other factors,
including the timing and principal amounts to be exchanged in the
exchange. These risks, uncertainties and other factors could cause
actual results to differ materially from those referred to in the
forward-looking statements, including, without limitation, whether
or not the Company will be able to consummate the exchange on the
timeline or with the terms anticipated, if at all. The reader is
cautioned not to rely on these forward-looking statements. Other
risks and uncertainties include those identified under the heading
“Risk Factors” in the Company’s Quarterly Reports on Form 10-Q for
the quarterly periods ended June 30, 2019 and September 30, 2019,
as filed with the Securities and Exchange Commission on August 1,
2019 and October 30, 2019, respectively, its Annual Report on Form
10-K for the year ended December 31, 2018 as filed with the SEC on
March 12, 2019 and in any subsequent filings with the Securities
and Exchange Commission. The forward-looking statements contained
in this press release reflect Verastem Oncology’s views as of the
date hereof, and the Company does not assume and specifically
disclaims any obligation to update any forward-looking statements
whether as a result of new information, future events or otherwise,
except as required by law.
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version on businesswire.com: https://www.businesswire.com/news/home/20191112005631/en/
Investors: John Doyle Vice President, Investor Relations &
Finance +1 781-469-1546 jdoyle@verastem.com
Media: Lisa Buffington Corporate Communications +1 781-292-4205
lbuffington@verastem.com
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