Molecular Insight Announces $45-Million Financing Commitment, Chapter 11 Filing, Corporate Restructuring and Management Changes
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Cambridge, MA, December 9, 2010 - Molecular Insight Pharmaceuticals, Inc. (NASDAQ: MIPI), a biopharmaceutical company discovering and developing targeted therapeutic and imaging radiopharmaceuticals for use in oncology, today announced that it has entered into a $45-million financing commitment from Savitr Capital LLC, to be effected through a corporate reorganization under a chapter 11 filing commenced today. MIPI has also made changes in its management to implement the restructuring.
The investment from Savitr Capital LLC ("Savitr"), a private investment company, would be in the form of common stock at $0.45 per share, representing 90% of MIPI's common stock. The investment is conditioned upon the replacement of MIPI's approximately $195,000,000 of existing bonds, including all accrued "pay in kind" ("PIK") interest, by $90,000,000 principal amount of secured notes. The newly issued notes would mature in six years and bear interest at 6% per annum, payable in the form of PIK notes during the first 24 months; either PIK notes or cash, at the option of MIPI, during the next 24 months and cash for the last 24 months, with one-half of the outstanding principal to be repayable on the fifth anniversary and the balance on the sixth anniversary of the note issuance date. In addition to the notes, the holders of MIPI's existing bonds would receive 10% of MIPI's common stock.
The Savitr investment is subject to a number of conditions, including the emergence of MIPI from its corporate restructuring by March 31, 2011, adherence to a cash collateral budget, satisfactory resolution of various issues related to Onalta(TM), a drug candidate, as well as certain bankruptcy-related preconditions, including the entry of certain Final Orders by the Bankruptcy Court incorporating, among other items, a confirmation order related to MIPI's chapter 11 plan, and the court's approval of a breakup fee and expense reimbursement protections for the benefit of Savitr.
The Savitr investment also provides for a 30-day period during which the Company is permitted to solicit other inquiries, proposals and bids from third parties who desire to propose an alternative transaction to the one proposed by Savitr.
Joseph Limber, MIPI Chairman of the Board, stated: "We are very pleased with the Savitr investment commitment and feel that it would provide the Company with both the funds and the restructured balance sheet needed to continue our business. We are disappointed that the bondholders have not accepted the Savitr proposal and that, as a result, we are required to commence chapter 11 proceedings to protect our Company's ongoing business. Nonetheless, we are hopeful that we will be able to reach a mutually acceptable restructuring agreement with all of our creditors."
The Definitive Investment Agreement and certain other documents will be filed on Form 8k with the Securities and Exchange Commission ("SEC") within the next four days.
In connection with the reorganization, Daniel L. Peters tendered his resignation as Chief Executive Officer, President and Director, and Charles H. Abdalian has tendered his resignation as Senior Vice President and Chief Financial Officer. Harry Stylli, Ph.D., a long-time member of the Company's Board of Directors, was elected as Chief Restructuring Officer and President, and Mark A. Attarian, a partner of Tatum, an executive financial services firm, was elected as Interim Executive Vice President and Chief Financial Officer. In addition, John W. Babich, Ph.D., was named principal executive officer and Mr. Attarian principal financial officer for SEC and other regulatory filing matters. In tendering his resignation, Mr. Peters stated: "I am pleased that I was able to aid the Company through its difficult restructuring process and, given that the Company is entering a new phase of its business, it is appropriate to hand the reins over to Harry Stylli. With his experience and expertise, I am confident that the Company is in capable hands." Mr. Stylli stated: "The Board of Directors of Molecular appreciates Dan's and Chuck's service and contributions in guiding the Company through a challenging period. We thank them for their contributions to the Company and wish them great success in their future endeavors."
CRT Investment Banking LLC, now known as M.M. Dillon & Co., acted as the Company's sole financial advisor for these transactions.
About Molecular Insight Pharmaceuticals, Inc.
Molecular Insight Pharmaceuticals is a clinical-stage biopharmaceutical company and pioneer in molecular medicine. The Company is focused on the discovery and development of targeted therapeutic and imaging radiopharmaceuticals for use in oncology. Molecular Insight has five clinical-stage candidates in development. For further information on Molecular Insight Pharmaceuticals, please visit www.molecularinsight.com.
Contact:
Mark A. Attarian
Interim Executive Vice President and Chief Financial Officer
617.492.5554.
mattarian@molecularinsight.com
