Funding comes in loans, preferred stock, and options to purchase shares.

GTC Biotherapeutics entered a financial arrangement with shareholder LFB Biotechnologies under which the latter could pay up to $22.2 million in loans, convertible preferred stock, and options to purchase additional stock.

LFB will provide about $4 million in cash upon signing and $8.3 million upon shareholder approval and has an option to tender up to an additional $6.4 million in cash. GTC will also obtain $3.5 million to pay off the remaining net principal amount of its GE Capital loan.

The initial $4 million payment will come through a $4.5 million secured convertible bridge note. The next $8.3 million of cash proceeds will be obtained in return for convertible preferred stock. The bridge debt will also switch to convertible preferred stock upon shareholder approval. If the option is fully exercised, LFB would provide an additional $6.4 million of cash funding to GTC on the same terms as the initial investment. 

The convertible preferred stock will carry a 10% dividend over five years. The conversion price for 47% of the convertible preferred stock will be $2.63 per share of common stock, representing a total of 4,562,738 shares. For the remaining 53%, it will be at $2.63 per share or the market price at shareholder approval, whichever is lower, representing at least 5,133,079 shares of common stock.

This $3.5 million of new debt to LFB will be repaid on a 10-year amortization schedule at 10.8% interest with a balloon payment on January 1, 2012. LFB will hold first liens on all assets including intellectual property to secure this debt and its existing debt from GTC.

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GTC to Receive $15M Convertible Debt Financing from LFB (Nov. 3, 2008)
Pharming Acquires Licenses to Fibrinogen Patents from GTC Biotherapeutics for $500,000 (June 25, 2008)
GTC Secures U.S. Partner to Advance Drug Targeted at Antithrombin Deficiencies (June 23, 2008)
LFB Biotechnologies and GTC Biotherapeutics Expand Partnership to Include Coagulation Factor IX Program (Jan. 10, 2008)

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