At the time of our last check, shares of PolarityTE Inc. (NASDAQ: PTE) were up 13.97% to trade at $0.3889 in early trading, which was followed by a plan to acquire the biotechnology firm.
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Whom did PTE engage in the contract with?
Today, Michael Brauser and PolarityTE (PTE) announced that they had established a non-binding letter of intent (the “LOI”) (“Brauser”). Through the LOI, PolarityTE permitted Brauser to make a proposal to purchase all of the Company’s existing equity interests for $1.03 per common share, with the whole purchase price to be paid in cash. There were 7,256,786 shares of PTE’s common stock outstanding as of December 23, 2022, and 256,457 more common shares were covered by unvested restricted stock units.
The negotiating process and implementation of conclusive transaction documents, the successful acquisition of a greater part of the outstanding shares stock of the Company by Brauser, the completion of due diligence investigations by Brauser, and other standard practice closing conditions are all necessary for the transaction to close.
The LOI states that, throughout the time frame ending March 15, 2022, Brauser will conduct careful research and the parties will make an effort to negotiate the parameters of the final transaction agreements (the “Due Diligence Period”). There can be no guarantee that, if at all, a formal agreement will be signed by that date or that the planned transaction would really go through.
There were around 4,787,824 outstanding common stock purchase warrants as of December 23, 2022, and they provide, among other things, that following a change in ownership of PTE’s outstanding shares of common stock greater than 50%. The owners of the warrants have the option to receive payment in cash equal to the value of the warrants computed using a method specified in the agreements controlling the warrants in the event that PTE stops filing updates with the Securities and Exchange Commission.
Unless specifically given in any separate deal that Brauser may join into with a warrant holder to concede a different amount, the LOI ponders that Brauser would then make a financial commitment or credit to PolarityTE in a required amount to pay cash payment of all outstanding warrants in conformance with such warrants.
Additional terms of LOI
According to the LOI, the conclusive transaction documents will stipulate that the total amount of severance payments made under PTE’s management employment agreements will not exceed $2,595,000. Additionally, Brauser will, if necessary, provide PolarityTE (PTE) with an investment or loan in an amount sufficient to cover these severance payments at closing.
