Nicolas Serandour, COO and CFO of Advanced Oncotherapy LON:AVO, commented: “We are delighted to have secured this financing partnership with Metric Capital. Vendor financing has become standard practice in the Proton Therapy Sector and this forms an essential part of our financial strategy, giving us greater confidence to secure new purchase orders and enhancing our returns. I am very pleased to have Metric Capital as our financing partner of choice and their support after extensive due diligence is a great endorsement of our technology and business plan. With the strong backing of Metric Capital and operating partners including Thales, Toshiba and VDL, we are uniquely positioned to deliver on our financing and execution strategy.”
John Sinik, Managing Partner of Metric Capital, said: “Advanced Oncotherapy represents a unique investment opportunity for Metric Capital. The proven technology developed over decades, coupled with the clear clinical need for the Company’s LIGHT machine, create an exciting backdrop for Metric Capital in supporting Advanced Oncotherapy’s growth. We have been very impressed with the Advanced Oncotherapy team, with their development partners and their achievements to date and look forward to supporting them as they make readily available a form of cancer treatment that can change the lives of thousands of patients a year in the UK and around the world.”
Advanced Oncotherapy plc (AIM: AVO), the developer of next-generation proton therapy systems for cancer treatment, has told DirectorsTalk that it has signed an agreement with a fund advised by Metric Capital Partners LLP, a pan-European private capital fund manager, whereby Metric Capital will invest GBP24 million in a financing facility to support the Company’s provision of vendor financing for the installation of Advanced Oncotherapy’s first LIGHT machine in Harley Street.
On 12 October 2015, the Company announced the establishment of a proton beam cancer therapy
centre in Harley Street. Funding for the clinic, the London Proton Therapy Centre Limited (“LPTC”), will come from the Company and its partners in equal amounts in the form of equity totalling GBP6 million and the provision of a vendor loan from Advanced Oncotherapy to LPTC.
The Agreement is subject to customary representations, undertakings and events of default and includes financial covenants relating to the future cash balances, revenues and profitability of Advanced Oncotherapy, and to the profitability of LPTC as well as a number of non-financial covenants relating to technological development, delivery of the first LIGHT system and first patient treatment. The Company will pay a cash interest of 250 basis points per annum above 3 month LIBOR (subject to a minimum LIBOR of 150 basis points) payable quarterly and payment in kind (“PIK”) interest of 850 basis points payable at maturity or convertible into ordinary Advanced Oncotherapy shares (“Ordinary Shares”) at 10p per Ordinary Share (subject to customary adjustments for convertible instruments). In addition, the Company has agreed to issue to Metric Capital each year during the life of the Agreement warrants over 14.5 million Ordinary Shares exercisable at 16p per Ordinary Share. The Agreement has a term of 5 years and requires any future equity capital injections to be carried out on terms similar to or better than the conversion rights of the PIK interest described above.
Of the GBP24 million financing, GBP11 million will be received shortly following signing. The second tranche of GBP13 million will be available for drawdown on completion of a GBP25 million cash or capital injection to fund the development of a manufacturing base. Should these milestones not be achieved by the end of March 2017, the initial GBP11 million tranche will become repayable by September 2017.
Metric Capital requires guarantees from certain directors and shareholders of the Company in order to enter into the Agreement; as a result, Michael Sinclair (Chief Executive Officer), Michael Bradfield (Non-Executive Director), Brahma AG (19.3% shareholder of the Company) alongside two other guarantors (together the “Guarantors”) have agreed to provide guarantees to Metric Capital for a total of GBP2.5 million. There are various covenants attached to these guarantees concerning the timing of the delivery of various components of the Harley Street project and treatment of the first patients. In consideration for the provision of these guarantees, the Guarantors have entered into a Guarantee Fee Deed with the Company, under which they will each receive 3% of the net profits of LPTC attributable to the Company (Advanced Oncotherapy is expected to have an interest of approximately 50% in LPTC at the start of operations) for a period of ten years commencing on the first year in which LPTC will generate a positive net profit and with cash payments commencing once all amounts under the Agreement have been repaid.
The Company and Metric Capital are exploring opportunities for further investment to facilitate the provision of vendor financing to AVO customers both in the UK and overseas.
Metric Capital will have the right to consent to certain reserved matters and the right to appoint a director to the Board of both Advanced Oncotherapy and LPTC and, in certain circumstances ADAM SA, a wholly owned subsidiary of Advanced Oncotherapy.
