Cyclo Therapeutics extends merger agreement with Rafael Holdings

Published 04/02/2025, 22:56
Cyclo Therapeutics extends merger agreement with Rafael Holdings

In a recent SEC filing, Cyclo Therapeutics, Inc. (market cap: $22.7 million) disclosed amendments to its merger plans and financial arrangements with Rafael Holdings, Inc., extending key deadlines and adjusting financial obligations. The company’s stock has shown strong momentum with a 28.78% gain year-to-date, according to InvestingPro data.

On Monday, Cyclo Therapeutics, a biopharmaceutical company with an impressive 91.24% gross profit margin, announced it has amended its merger agreement with Rafael Holdings, extending the deadline from February 15, 2025, to March 31, 2025. This extension allows additional time for the Securities and Exchange Commission (SEC) to declare effective the registration statement on Form S-4 filed by Rafael.

The merger, initially announced on August 21, 2024, involves a two-step process where Cyclo Therapeutics will first merge with a subsidiary of Rafael and subsequently with a second subsidiary, resulting in Rafael’s ownership of the merged entity. Rafael currently owns approximately 39.5% of Cyclo Therapeutics’ common stock.

Concurrently, Cyclo Therapeutics entered into an Eighth Amended and Restated Note Purchase Agreement with Rafael, issuing a convertible promissory note worth $2 million. This note supersedes previous agreements and contributes to a series of financing arrangements between the companies since June 2024, totaling $16 million.

Furthermore, the maturity dates of prior notes held by Rafael, which were set to mature on February 15, 2025, have been extended to match the new merger agreement deadline of March 31, 2025. These notes carry a 5% annual interest rate, payable upon maturity, and are convertible into Cyclo Therapeutics’ common stock under specific conditions.

Cyclo Therapeutics plans to use the proceeds from the latest note for working capital and general corporate purposes, particularly important given the company’s current ratio of 0.17 indicating tight liquidity. The series of financial agreements underscores the ongoing relationship between Cyclo Therapeutics and Rafael Holdings as they move towards completing the merger. InvestingPro analysis reveals 8 additional key financial insights that could impact this merger’s outcome. Subscribers gain access to detailed financial health scores and comprehensive valuation metrics to better evaluate such corporate actions.

This news is based on a press release statement and reflects the company’s current financial strategy as it navigates the merger process with Rafael Holdings. While the company has been quickly burning through cash, analysts tracked by InvestingPro predict profitability this year, potentially strengthening its position in the merger process.

In other recent news, biopharmaceutical company Cyclo Therapeutics has been navigating some significant developments. The company received a notice from the Nasdaq Stock Market indicating potential delisting due to non-compliance with certain listing rules. Cyclo Therapeutics is required to submit a plan by late February 2025 to regain compliance, with a possible extension until June 2025 if the plan is accepted.

Cyclo Therapeutics has also been involved in a series of financing agreements with Rafael Holdings, Inc. These agreements include a $3 million convertible promissory note and an additional $1 million convertible note, both aimed at supporting the company’s working capital and general corporate purposes. The company has also secured $2 million in funding from Rafael Holdings via another convertible promissory note.

In addition to the financing agreements, Cyclo Therapeutics announced an extension to the timeline of its planned merger with Rafael Holdings and the maturity dates of several convertible promissory notes. The merger deadline has been extended to February 2025, and the maturity dates of the notes, aggregating $16 million, have been extended to match the new merger deadline. These recent developments indicate strategic financial maneuvers ahead of the anticipated merger between Cyclo Therapeutics and Rafael Holdings.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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