Genitope (GTOP) Receives Acceleration Notice From GE Capital (GE)
In Today's 8-K Filing From Genitope (Nasdaq: GTOP): On April 14, 2008, Genitope Corporation received a notice of acceleration and demand for payment pursuant to that certain Master Security Agreement, dated as of October 23, 2006, between General Electric Capital Corporation (NYSE: GE) and the Company, and those certain promissory notes and security deposit pledge agreements related thereto. The Notice advised the Company that it was in default of its obligations to make installment payments due under the promissory notes on April 1, 2008 and declared the acceleration of all indebtedness of the Company to GECC under the Loan Agreements. The Notice stated that the aggregate amount due and payable under the Loan Agreements as of April 14, 2008 was $3,828,209.98. This amount included principal and interest through April 14, 2008, as well as a prepayment premium in accordance with the terms of the Loan Agreements. The amount due increases by interest accrual of $1,023.44 per day. The Notice further provided that GECC has incurred costs and expenses in connection with its rights under the Loan Agreement, and expects to incur additional expenses, for which the Company may be responsible. GECC notified the Company in the Notice that it intends to proceed with the exercise of its legal rights and remedies if payment is not made in full as of the date of the Notice, April 14, 2008. As of the date hereof, the Company has not paid any amounts accelerated under the Loan Agreements and is currently is discussions with GECC regarding payment of amounts due. If the Company is unable to pay, or negotiate a payment settlement with, GECC, GECC may fully exercise its rights and remedies under the Loan Agreements which may include, but are not limited to, application of security deposits held by GECC against the obligations of the Company, demand for turnover of equipment, foreclosure of GECC’s liens and security interests and the commencement of legal proceedings, any of which would adversely affect the Company’s financial condition, operating results and business.
...The Company has provided notices under the WARN Act to all but 21 of its employees, including all of its executive officers other than Dan W. Denney, Jr., its Chief Executive Officer, that it plans to conduct a “mass layoff” at its facility in Fremont, and the employment of all of these employees is expected to terminate by May 30, 2008. As a result of this reduction in force, the Company expects that approximately 20 employees will remain as employees of the Company as of the end of May 2008, and that these employees will primarily be those involved in the development of its monoclonal antibody panel. Through April and May 2008, the Company intends to continue to meet its payroll obligations to the employees to whom it has delivered notices under the WARN Act to the extent required under the WARN Act and to satisfy its other obligations to employees as would be required in the ordinary course of business...
...At the present time, the Company’s strategy for the benefit of its creditors and stockholders is to take steps to preserve and support the future value, if any, of MyVax personalized immunotherapy (formerly its lead product candidate), to seek funding for its monoclonal antibody program, to conserve its current cash to the extent reasonably practicable and to generate cash, including potentially through the sale of assets. The Company is evaluating its alternatives with respect to the sale of equipment and other non-critical assets. In addition, the Company is pursuing strategic alternatives for the Company and its monoclonal antibody and MyVax programs, including potentially through a spin-off or sale to a separately funded entity or entities. Stockholders should recognize that, to satisfy its liabilities, including in particular those under its lease agreements, fund the development of its monoclonal antibody program and preserve the value of the MyVax program, the Company may pursue strategic alternatives that result in the stockholders of Genitope having little or no continuing interest in the monoclonal antibody or MyVax programs or other assets of Genitope as stockholders or otherwise.
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