Item 1.01 Entry into a Material Definitive Agreement
Indenture
On November 14, 2019, Verastem, Inc. (the “Company”) issued approximately $62.9 million aggregate principal amount of 5.00% Convertible Senior Second Lien Notes due 2048 (the “Notes”) pursuant to an indenture by and between the Company and Wilmington Trust, National Association, as trustee and collateral agent (the “Indenture”). The Notes were issued upon settlement of previously announced privately negotiated agreements with 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), pursuant to which such accredited investors and/or qualified institutional buyers exchanged approximately $114.3 million aggregate principal amount of the Company’s 5.00% Convertible Senior Notes due 2048 (the “Existing Notes”) for the Notes. Following the exchange, the aggregate outstanding principal amount of the Existing Notes is approximately $35.7 million.
The Notes are the Company’s senior, secured obligations and will be senior in right of payment to the Company’s future indebtedness that is expressly subordinated in right of payment to the Notes, and equal in right of payment with the Company’s existing and future indebtedness that is not so subordinated. The Notes are structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, and (to the extent the Company is not a holder thereof) preferred equity, if any, of the Company’s subsidiaries. The Notes will pay interest at a rate of 5.00% per year, payable semiannually in arrears on May 1 and November 1 of each year, and will mature on November 1, 2048, unless earlier converted or repurchased. In addition, the Notes will have the terms as described in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 12, 2019 (the “Prior Form 8-K”). The information set forth in the Prior Form 8-K is incorporated herein by reference.
Amendment to Credit Facility
On November 14, 2019, the Company entered into an amendment to its existing senior secured credit facility (the “Credit Facility Amendment”) with Hercules Capital, Inc., as agent (in such capacity, the “Agent”) for itself and the other lenders, pursuant to which the Agent consented to (i) the Company’s use of cash to facilitate the exchange transaction described above and (ii) the issuance of the Notes, subject to the liens securing such Notes being subordinated to the liens in favor of the Agent and to the imposition of certain liquidity thresholds and financial covenants.
Each of the foregoing descriptions of the Indenture and the Credit Facility Amendment does not purport to be complete and is qualified in its entirety by reference to the Indenture, the form of 5.00% Convertible Senior Notes due 2048, and the Credit Facility Amendment, which are filed as Exhibits 4.1, 4.2, and 10.1, respectively, to this Current Report on Form 8-K.