November 27, 2018
LYON, France & NEW YORK–(BUSINESS WIRE)–The Medicrea Group (Euronext Growth Paris: FR0004178572- ALMED ; OTCQX Best Market – MRNTY & MRNTF), pioneering the transformation of spinal surgery through Artificial Intelligence, predictive modeling and patient specific implants with its UNiD™ ASI (Adaptive Spine Intelligence) proprietary software platform, services and technologies, today announced the closing of a $30 million senior secured notes issue by Medicrea and wholly subscribed by Perceptive Advisors, a leading multi-strategy healthcare investment firm. In conjunction with the senior secured notes, Medicrea has issued to Perceptive Advisors warrants for the Company’s new ordinary shares.
Denys Sournac, Chairman of the Board of Directors and Chief Executive Officer, states “We are glad to execute this financing with Perceptive Advisors. The new secured notes will give us the necessary capital to continue to fuel our UNiD™ ASI growth strategy in the United States and will give us the required funds to continue the development of other proprietary products. We look forward to working with Perceptive, one of the leading healthcare focused investment firms in the world. We believe this refinancing is another validation of our proprietary, patient specific technology focused on restoring sagittal and coronal alignment.” 
Sam Chawla, Portfolio Manager at Perceptive Advisors states, “We are excited about this investment in Medicrea. This refinancing retires most of the Company’s existing debt, and gives the company the financial flexibility to accelerate UNID™ ASI adoption. The company has a unique service and product offering in the Spine market and has delivered superior patient outcomes. With a clean capitalization, simplified balance sheet, and excess cash, Medicrea has a significant opportunity to grow over the coming years.”
Key Terms of the Notes
The refinancing facility will consist of $30 million senior secured and guaranteed notes, governed by New-York law with coupon based on the greater of Three-Month LIBOR or 2.5% plus a margin of 8.5%. The notes will be issued at par value on the 27th of November 2018, the expected date for the settlement and delivery, and will mature on the 27th of November 2022. The notes will be guaranteed by Medicrea USA Corp, a 100 % fully owned subsidiary of Medicrea and will be secured by pledges on certain assets and receivables of the Group.
This refinancing will help Medicrea fund its UNiD ASI growth strategy in the United States as well as continue to focus on new product development. Five years after its initial launch in September 2013, over 3,000 patients have benefited from UNiD™ ASI 100% proprietary pre-operative planning technologies and services associated with patient-specific spinal realignment rods. UNiD products have seen a strong acceleration in adoption rate in 2018 especially in the USA (+62% cases year-to-date 2018 and +90% in Q3 2018).
Medicrea has also retired all of its outstanding €15 million convertible debt with Athyrium Capital Management and will use the proceeds to pay down portions of other secured outstanding debt for a total amount of €1.55 million.
Medicrea believes this refinancing (excluding the exercise of the warrants) should support the development of the Company until it reaches operational profitability.
Key Terms of the Warrants
Perceptive Credit Holdings II,LP subscribed to 1,000,000 warrants. The settlement and delivery of the warrants should take place on the 27th of November, 2018. These warrants will not be subject to a request for admission to trading on the Euronext Growth market in Paris and will therefore not be listed.
One warrant entitles its holder to subscribe to one new Medicrea International ordinary share, at an exercise price of € 2.19, corresponding to the volume-weighted average of the share prices of the last 10 trading days prior to the fixing of the subscription price, decreased by a 10 % discount pursuant to the 14th resolution of the General Meeting of May 17, 2018. The warrants will be exercisable for a period of seven years after their issuance.
The new shares to be issued upon exercise of the warrants will carry current dividend rights and will be tradable on Euronext Growth and will be listed on the same line as the existing shares (ISIN : FR0004178572).
The shares that would be issued in the event of the exercise of all the warrants represent 4.93% of the Company’s share capital as of today (on a fully diluted basis).
For illustrative purposes, the interest of a shareholder holding 1% of the share capital of Medicrea would be brought to 0.94% if all the warrants were to be exercised.