Alimera Sciences (ALIM) Unit Amends Term Loan with Hercules Capital

October 20, 2016 4:43 PM EDT

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Alimera Sciences, Inc. (Nasdaq: ALIM) announced that its United Kingdom subsidiary, Alimera Sciences Limited (Limited), has amended its $35 million term loan agreement (the Amendment) with Hercules Capital, Inc. (NYSE: HTGC) (Hercules). Under the Amendment, Hercules has agreed to provide Limited up to $10 million in additional financing upon the achievement by Alimera and its subsidiaries of certain revenue milestones.

“This amended debt facility strengthens our financial position. We believe the Amendment mitigates the need to seek additional financing for the continued commercialization of ILUVIEN in the U.S., the United Kingdom, Germany and Portugal," said Rick Eiswirth, Alimera's president and chief financial officer. "Further, the Amendment provides us with the potential to access additional funds for expansion elsewhere in Europe or, upon the achievement of positive cash flow in our existing markets, clinical trials for possible extension of the ILUVIEN label."

Under the Amendment, the interest-only payment period has been extended by 18 months, through November 2018, provided that Alimera meets, on a consolidated basis with its subsidiaries, certain revenue and liquidity requirements. The amended debt facility requires that Alimera and its subsidiaries meet certain minimum revenue, liquidity and EBITDA covenants. The revenue covenant will not apply with respect to any month during which Alimera and its subsidiaries maintain at least $35 million in liquidity, including cash and eligible accounts receivable, at all times during such month and no event of default under the amended debt facility has occurred or exists at any time during such month.

Amortization of the term loan is now expected to start in December 2018 with 24 equal monthly payments of principal and interest.

The term loan will accrue interest from and after the date of the Amendment at the greater of 11% or 7.5% plus the prime rate per annum. The outstanding principal balance will also bear “payment in kind” interest at the rate of 1% per annum, which will be added to the outstanding principal balance at each interest payment date.

In connection with the Amendment, Alimera issued Hercules a warrant to purchase up to the amount of shares of Alimera’s common stock equal to $500,000 divided by the lowest volume-weighted average sale price for a share reported over any ten consecutive trading days during the period commencing on and including September 23, 2016 and ending on the earlier to occur of (i) December 30, 2016 (inclusive of such date), and (ii) the second trading day immediately preceding the date of closing of a Merger Event (as such term is defined in the warrant agreement).

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