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Posted: July 11, 2008
CombiMatrix Receives $10 Million From Sale of Secured Convertible Note to Single Institutional Investor
(Nanowerk News) CombiMatrix Corporation (Nasdaq:CBMX) announced today that it has sold a $10 million secured convertible note to a single institutional investor. The note is due on the earlier of July 10, 2010 or within four months after payment from National Union Fire Insurance Company (an AIG company, (NYSE:AIG)) in accordance with the $35.7 million judgment issued by the United States District Court for the Central District of California. National Union has appealed the judgment. The note bears annual interest of 10% and is convertible into common stock of CombiMatrix Corporation at any time at a conversion price of $11.87 per share, which is equivalent to 842,460 shares of the Company's common stock. Interest payments are to be made quarterly beginning October 2008. The note is secured by the judgment as well as other assets of the Company. CombiMatrix also has the right to force conversion of the note upon meeting certain trading conditions. In addition to the note, CombiMatrix issued a warrant to purchase 168,492 shares of common stock at an exercise price of $11.87, and a warrant to purchase 168,492 shares of common stock at an exercise price of $13.65. The term of both warrants is five years, and CombiMatrix has the right to call the warrants upon meeting certain trading conditions.
There was no underwriter or broker involved in this transaction. After covering certain issuance costs, the net proceeds to CombiMatrix were approximately $9.8 million, which will be used for working capital needs including expansion of the Company's rapidly growing molecular diagnostics business.
As a condition to the financing, all executive officers of CombiMatrix, including the CEO and board of directors, have signed lock-up agreements that prohibit selling of their current or future holdings (except selling for tax reasons, under certain conditions) until one-half of the principal amount of the note has been converted or redeemed.
"We are pleased to have completed this financing in the form of a convertible note, under very difficult market conditions. Though we can never predict a final outcome or timing, we hope this capital will bridge us to collection of the above noted judgment against National Union. Meanwhile, we will continue to build our promising diagnostics and genetic analysis business," stated Dr. Amit Kumar, President and CEO of CombiMatrix Corporation.
About CombiMatrix Corporation
CombiMatrix is a diversified biotechnology business, through the development of proprietary technologies, products and services in the areas of drug development, genetic analysis, molecular diagnostics, nanotechnology research, defense and homeland security markets, as well as other potential markets where our products and services could be utilized. The technologies they have developed include a platform technology to rapidly produce customizable, in-situ synthesized, oligonucleotide arrays for use in identifying and determining the roles of genes, gene mutations and proteins. This technology has a wide range of potential applications in the areas of genomics, proteomics, biosensors, drug discovery, drug development, diagnostics, combinatorial chemistry, material sciences and nanotechnology.
Additional information about CombiMatrix Corporation is available at www.combimatrix.com or by calling 1-800-985 CBMX (2269). Additional information about their laboratory, CombiMatrix Molecular Diagnostics, is available at www.cmdiagnostics.com or by calling 1-800-710-0624.