MannKind Corporation (NASDAQ:MNKD) has announced serving Mann Group LLC with a funding request notification in regards to the terms of the Mann Group Loan Arrangement to draw the outstanding $30.1 million of the agreement.
After receiving the funding, MannKind will use the $10.6 million proceeds for capital and pay off its interest accrued under the Loan Arrangement. In a recent subordination agreement signed with Deerfield, the Mann Group agreed not to accept or demand any payment under the agreement until payments to Deerfield have been fully satisfied only for payments that are allowed under the subordination agreement.
After the request is granted, the company will receive $19.4 million of cash and draw the total amount under the loan agreement. The company is required to pay all interest outstanding by June 30, 2017. The remaining balance after the transaction will be $79.7 million.
In a statement, MannKind Corporation Chief Executive Officer Michael Castagna said the advance will increase the company’s cash at hand as it continues to explore possible opportunities so as to boost its capital structure. He lauded the cordial working relationship with Mann Group and as well as their support to MannKind.
In other segment, MannKind Corporation has signed a third amendment to their loan agreement under which the maturity of MannKind’s $10 million principal have been moved to October 31, 2017 from the previous July 18, 2017. Under the agreement, Deerfield will receive 3,584,230 shares of MannKind’s common stock in exchange for $5 million of the 9.75% Senior Convertible Notes due December 2019. The shares will be exchanged at the rate of $1.395 per share. The total amount being repaid and exchanged under the Tranche 4 Notes is s representation of the principal amount which would otherwise would be repaid in December 2019.
According to the terms of the agreement, Deerfield will push the maturity of the existing the $10 million loan facility from July 18, 2017 to August 31, 2017. This extension will be subject to some conditions. Among the conditions include a requirement by MannKind not to experience an Event of Default or a Material Adverse Event, proceeds amounting to around $19.4 million from the load facility and maintain at least $10 million in Cash and Cash Equivalents.