Motus GI Holdings, a medical technology company providing endoscopy solutions that improve clinical outcomes and enhance the cost-efficiency associated with the diagnosis and management of gastrointestinal conditions, refinanced its debt and expanded its long-term credit facility by securing a new loan agreement with Kreos Capital VI LP for up to $12.0 million, which replaces the previous term loan agreement with Silicon Valley Bank and removes the existing $10.0 million minimum cash balance liquidity covenant.
"We are pleased to announce this new partnership with Kreos Capital, a leading debt provider for high-growth companies. We believe this transaction reflects the confidence that Kreos has in the Company and our ability to execute our strategy," commented Tim Moran, Chief Executive Officer of Motus GI. “By increasing the credit line by 50 percent from $8.0 million to $12.0 million, this new agreement immediately strengthens our balance sheet and extends our cash runway to continue to build the market for the Pure-Vu System.”
Chris Church, Principal at Kreos, commented, “The Pure-Vu system is an innovative product with the potential to substantially improve bowel preparation, and we are excited to partner with Motus GI for the next stage of their growth bringing this system to clinicians across the country.”
The new term loan agreement is split into three tranches, including a $5.0 million term loan and a $4.0 million convertible loan that were both funded on July 16, 2021. The third tranche is a $3.0 million term loan option available to be drawn by the Company through December 31, 2021. The term loan tranches require monthly interest-only payments at an implied fixed interest rate of 9.5% per annum through September 30, 2022, with, subject to certain conditions, the potential to extend interest only payments to June 30, 2023, followed by amortizing monthly payments of principal and interest until June 1, 2025. The Company will make monthly cash interest-based payments on an implied annual interest rate of 7.75% on the convertible tranche through maturity, if not converted, at which point the outstanding principal will be due 48 months following the closing date, on July 1, 2025. For the convertible tranche, a fixed conversion price, exercisable at the option of the lender, was set at $1.40, representing a 45% premium to the closing price of the Company’s stock on July 16, 2021. As part of the transaction, the Company also issued the lender a warrant to purchase 190,949 shares at an exercise price of $1.0474 per share.
The Company intends to use the proceeds of the credit facility to refinance the Company’s existing indebtedness in the amount of approximately $8.2 million, and to enhance the Company’s product development and commercial growth plans, and for general corporate purposes.