ProPhase Labs Inc. (PRPH) last week announced closing of an unsecured debt financing totaling $10 million. The company completed the process by issuing two unsecured promissory notes. The partially convertible notes equals to an aggregate amount of $10 million.
Each issued Note will become due and is payable after completion of 36 months from date funding was closed (Closing Date). The notes will subject to an annual interest rate of 10% from Closing Date. The interest will be payable on quarterly basis until each of the Note stands fully paid. As per funding terms, after completion of 13 months after the Closing Date, company will have right to prepay the Notes anytime. If the company at that time decides to prepay then it will inform the lenders about the same in advance. The intimation will be through a written notice and is also subject to consent of the lenders if company has to pay prior to that time.
With the completion of 13 month after the Closing Date, lenders will also become eligible for conversion of those Notes. They will become eligible any time or from time to time to convert the Notes into common stock of the company. But they can convert only up to an amount of $3 million into stocks and that too at per share price of $3.00.
Pharmaloz Manufacturing, Inc. is a wholly-owned company of ProPhase Labs which guaranteed the repayment of the Notes.
The company is intending using proceeds from the Notes for general corporate purposes and for working capital. The utilization of funds could be in spending upon development and commercialization of products, capital expenditures. The company could also utilize the funds enhancing human capital and exploring new business opportunities including acquiring companies, businesses, products and technologies. The acquisitions could be from within or from outside of the consumer products industry.