Neovasc (NSDQ:NVCN) said today that holders of its senior secured convertible notes, originally due May 17, 2019, have agreed to extend the maturity of the notes from next year to May 17, 2020, and said yesterday it will initiate a reverse stock split as it looks to regain compliance with minimum bid price requirement of the Nasdaq stock market.
The Vancouver-based company said it entered into a waiver agreement extending the date a year and permitting an increase for the company’s quarterly cash burn as defined in the notes.
“We have negotiated with the debt note-holders and, though we have little to no leverage, convinced them to give us some concessions, for which we are grateful. Most importantly, the extension of the expiration date for the convertible debt by one year will provide the Company with greater flexibility for repayment of the debt, and while no predictions can be made as to conversions, this extension may ease the pressure on the conversions,” prez & CEO Fred Colen said in a press release.
The deal also included a lockup and leak-out agreement with note holders through which they agreed not to sell shares of the company’s stock for the five consecutive trading days preceding and 15 days following the company’s reverse stock split, which it announced yesterday as part of a plan to regain compliance with Nasdaq stock market regulations.
Neovasc said that the Nasdaq Hearings Panel granted it an extension to October 15 to regain compliance with its $1 minimum bid price requirement, and added that it hopes to regain compliance through a 1-for-100 reverse stock split.
Through the deal, each holder of Neovasc shares will receive a single share of the company’s common stock for each 100 they previously held.
“We believe that remaining on the Nasdaq Capital Market is a critical piece of our turnaround strategy for the company, and completing the reverse stock split on an accelerated timeline is a necessary to maintain this listing. We expect the reverse stock split will assist our shareholders by simplifying our capital structure through the consolidation of our shares to form a smaller number of proportionally valuable shares,” prez & CEO Colen said in a prepared statement.
Last month, Neovasc saw shares fall after the medical device maker posted second quarter earnings that showed growing losses.