22nd Century Group has reduced the outstanding principal of its senior secured credit facility from approximately $22.1 million to approximately $14 million as part of an amendment and waiver process with its lenders.
The reduction reflects a waiver and repayment of the $7.5 million minimum cash balance required under terms of the original debenture agreements, which was held in an escrow account. The company also assigned an existing promissory note pertaining to the company’s previous holdings in Panacea Life Science Holdings as additional consideration in the debt reduction transaction.
In a nonmonetary exchange, the assigned value of the promissory note was allocated as $600,000 to further principal reduction and $2 million to a reduction in the put price associated with the lender’s outstanding warrants, which portion was subsequently cancelled.
The remaining principal loan balance of $14 million and the remaining $500,000 of the put price will be due at maturity in 2026 in accordance with the original terms of the debenture agreements. The company was not required to pay any cash to the lenders in connection with this transaction.
“We continue to actively manage our balance sheet, with a focus on executing our cost reduction initiatives. The reduction in principal amounts owed under the senior secured credit facility as a result of the amendment and waiver will provide for annual cash interest savings of approximately $0.5 million per year,” said Hugh Kinsman, chief financial officer of 22nd Century Group, in a statement.
Subsequent to the debt reduction, the company announced the consummation of a public offering with $5.25 million in gross proceeds, which will be used for general operating purposes.
22nd Century Group is offering 10 million shares of its common stock and warrants to purchase up to 20 million shares of common stock at a combined public offering price of $0.525 per share and accompanying warrants.
