Gossamer Bio launches exchange offer, consent solicitation

Gossamer Bio (GOSS) commenced an exchange offer to exchange any and all of its 5.00% Convertible Senior Notes due 2027 for a pro rata portion of up to $72.0 million in aggregate principal amount of its new 7.50% Convertible Senior Secured First Lien Notes due 2030, up to 317,647,058 shares of its common stock or, in lieu of issuing shares of Common Stock to the extent such shares would cause any Eligible Holder to beneficially own greater than 9.99% of the outstanding Common Stock, prefunded warrants to purchase shares of Common Stock and with respect to Eligible Holders who tender prior to the Early Tender Date, warrants to purchase shares of Common Stock. Simultaneously with the Exchange Offer, the Company is soliciting consents from holders of the Existing Convertible Notes to adopt certain proposed amendments to the indenture governing the Existing Convertible Notes. The Proposed Amendments would eliminate substantially all of the restrictive covenants in the Existing Convertible Notes Indenture as well as certain events of default and related provisions applicable to the Existing Convertible Notes. On the date hereof, holders of approximately 75.2% of the Existing Convertible Notes have entered into a transaction support agreement with the Company to support the Exchange Offer and Consent Solicitation, including by tendering all of their Existing Convertible Notes in the Exchange Offer. The Transaction Support Agreement is subject to certain customary conditions, including a condition that the Company will not consummate the Exchange Offer unless the holders of 98% of the aggregate principal amount of Existing Convertible Notes tender their Existing Convertible Notes in the Exchange Offer. The New Convertible Notes will be secured, first lien obligations of the Company. The New Convertible Notes will mature on July 1, 2030, unless earlier converted or repurchased in accordance with the terms of the New Convertible Notes, provided that the New Convertible Notes shall have a springing maturity date of March 2, 2027 if more than $4.0 million of the Existing Convertible Notes remain outstanding at such time. The New Convertible Notes will bear interest at a rate of 7.50% per annum from the initial settlement date of such New Convertible Notes, which interest will be payable in cash semi-annually in arrears on January 1 and July 1 of each year, beginning on January 1, 2027. The conversion rate for the New Convertible Notes will initially be the number of shares of Common Stock per $1,000 principal amount of New Convertible Notes equal to the quotient of $1,000 divided by a 10% premium to the Reference Price, rounded to the nearest 1/10,000th of a share. The “Reference Price” will equal the greater of $0.17 and the lower of $0.34 and the average of the daily volume-weighted average prices for the seven consecutive VWAP trading days beginning on, and including, the VWAP trading day immediately following the final settlement date. The Purchase Warrants will be exercisable with a cash exercise price equal to the greater of $0.34 and a 25% premium to the Reference Price, subject to adjustments.