Edesa Biotech founder Par Nijhawan to invest up to $5M in company

Edesa Biotech (EDSA) announced that the company has entered into a purchase agreement with an entity affiliated with Par Nijhawan, MD, Edesa’s CEO and Founder, to invest up to $5.0 million in the company, including an immediate investment of approximately $1.5 million. The entity will purchase shares of the company’s Series A-1 Convertible Preferred Shares, as amended, having a stated value of $10,000 per share, and warrants to purchase the company’s common shares in a transaction structured as an at-the-market issuance under Nasdaq rules. The Series A-1 Preferred Shares will be convertible into the company’s common shares at a conversion price of $3.445. The Warrants will be exercisable for a number of common shares equal to 75% of the common shares initially issuable upon the conversion of the Series A-1 Preferred Shares. Subject to certain exceptions and adjustments for share splits, each Series A-1 Preferred Share is convertible into a number of Edesa’s common shares calculated by dividing the sum of the stated value of the Series A-1 Shares being converted plus a return equal to 10% of such stated value per annum by the conversion price. The Warrants will have an exercise price of $3.445 per share, will be exercisable immediately upon issuance and will expire five years from the date of issuance. Under applicable Canadian securities laws, purchases of Series A-1 Preferred Shares under the purchase agreement in an aggregate amount greater than $2.0 million will be subject to the prior approval of the company’s shareholders, excluding Dr. Nijhawan. The company also announced that in connection with the transactions contemplated by the purchase agreement, the $10 million revolving credit agreement previously entered into with the purchaser has been terminated. The company did not draw any funds from the facility.