Orgenesis subsidiary Theracell enters $1 million convertible loan agreement

Theracell Laboratories IKE, a subsidiary of Octomera LLC and ultimately of Orgenesis Inc. (NASDAQ:ORGS), entered into a Convertible Loan Agreement with Alpha Prosperity Fund SPC, according to a statement filed with the Securities and Exchange Commission. According to InvestingPro data, Orgenesis, currently valued at $5.91 million in market capitalization, operates with significant debt burden and faces challenges with cash management. The company’s shares are currently trading below their Fair Value, based on InvestingPro’s proprietary valuation model.

Under the agreement, announced in the SEC filing on Tuesday, Theracell will receive an initial loan of $1,000,000 at a 10% annual interest rate, with a maturity of 36 months. For the first 30 days after the agreement’s effective date, Theracell may prepay the loan without lender consent. After that period, prepayment requires lender approval. This new financing comes as Orgenesis maintains a concerning current ratio of 0.07, indicating potential liquidity challenges, as revealed by InvestingPro analysis.

Beginning 30 days after the effective date and continuing until the loan matures, the lender has the option to convert the outstanding loan amount into equity of either Orgenesis or Theracell. This conversion could result in the lender holding up to 80% of the outstanding share capital of the chosen entity. Conversion into Orgenesis equity is subject to shareholder approval.

The agreement also grants the lender a warrant to purchase 15% of the fully diluted share capital of either Orgenesis or Theracell, at the lender’s discretion, for a total exercise price of $250,000. The warrant is exercisable for three years from issuance, and share issuance is subject to shareholder approval. Additional warrants will be issued for each further $1,000,000 drawn from the credit facility.

Theracell has access to a credit facility of up to $10,000,000 under the agreement, subject to the lender’s approval for each tranche. The facility terms are similar to the initial loan, except for the conversion feature. Theracell has drawn $7,083,857 from this facility to date. Previous debt facilities from Newtech Investment Holdings, LLC and Ariel Malik, totaling $6,083,857, have been repaid.

After 30 days from the effective date and subject to necessary approvals, the lender may appoint three members to the Orgenesis Board of Directors. The agreement includes standard covenants and security interests over certain assets.

This article is based on a statement filed with the Securities and Exchange Commission. Despite current challenges, analysts tracked by InvestingPro project significant revenue growth of 131.64% for FY2024, suggesting potential turnaround opportunities. InvestingPro offers 16 additional investment tips for Orgenesis, helping investors make more informed decisions about this volatile biotech stock.

In other recent news, Orgenesis Inc . has experienced several changes in its leadership team. The company announced that Ashish Nanda has resigned from its board of directors, effective immediately. Orgenesis clarified that Mr. Nanda’s departure was not due to any disagreement with the company or its management. Additionally, Orgenesis reported the resignation of its Chief Financial Officer, Victor Miller, along with three other directors. Mr. Miller’s exit was noted to be for pursuing other opportunities and not due to any conflicts with company operations or policies. These developments come as Orgenesis continues to navigate its corporate strategy and governance. The company expressed appreciation for the contributions of the departing members during their tenure.

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