Update on financing and convertible notes

Advanced Oncotherapy PLC

31 May 2023

 

31 May 2023

ADVANCED ONCOTHERAPY PLC

("Advanced Oncotherapy", "AVO" or the "Company")

Partial conversion of Convertible Notes

Update on financing discussions

Further issue under Secured Convertible Note Facility

Advanced Oncotherapy (AIM: AVO), the developer of next-generation proton therapy systems for cancer treatment, announces that it has received a conversion notice for a portion of the convertible notes, which were issued to a French counterparty, as announced on 1 March 2023, into new ordinary shares of 25p each in the share capital of the Company ("Ordinary Shares"). Further details of the conversion are set out below:

·    Number of convertible notes converted: 10

·    Total value of the convertible notes being converted: £50,000

·    Conversion price: £0.25 being the higher of 90% of the lowest daily VWAP in 15 days preceding conversion notice of £0.0523854 or the nominal value of £0.25

·    Number of new Ordinary Shares issued from the conversion: 200,000

As set out in the Company's announcement on 1 March 2023, if the conversion price is below the nominal value of the Ordinary Shares, the Company shall pay the noteholder a conversion fee calculated to compensate for the difference, which may be settled through the issue of new Ordinary Shares or cash. As such, a conversion fee of £56,702 (the "Conversion Fee") is to be paid. The Conversion Fee will be settled through the issuance of 756,020 new Ordinary Shares.

Application will be made for admission of the 200,000 new Ordinary Shares deriving from the conversion of the convertible notes and the 756,020 new Ordinary Shares in satisfaction of the Conversion Fee to trading on AIM ("Admission") and it is expected that Admission will occur on or around 6 June 2023.

Update on financing discussions

Advanced Oncotherapy's Board continues to consider financing options that are in the best interests of the Company and its shareholders and, since the announcement made by the Company on 5 May 2023, has taken steps to manage its working capital, including through further cost reductions and managing of existing creditors which will extend the Company's cash runway into June 2023. In respect of further financing options being explored, the Company is in discussions to raise further funding under the secured loan note agreement as well as through other non-dilutive financing options and the board is hopeful of securing additional financing during June 2023. Whilst the Board is optimistic of a satisfactory outcome on the financing options being explored, there can be no certainty that these discussions will be successful, nor to the terms or timing thereof.

Further announcements will be made with regards to financing at the appropriate time.

Further issue under secured convertible loan note agreement

Further to the Company's announcements released on 1 March 2023 and 5 May 2023, the Company has issued convertible notes totalling £34,600 under its secured convertible loan note agreement (the "Secured Convertible Note") in settlement of amounts the Company owed to an existing supplier.

This brings the total amount of Secured Convertible Notes to £6,379,725.

As announced on 1 March 2023, the key terms of the Secured Convertible Note are as set out in the table below:

Maturity Date	9 months from the date of the secured convertible loan note agreement
Conversion	Option to convert prior to the Maturity Date at 20% discount to the next equity fund raising of the Company
Interest Rate	Fixed interest of 1.25% per month until the earliest of the full redemption or the conversion of the loan
Revenue share entitlement for the Harley Street machine	The Operator of the Harley Street Centre shall pay to the Lenders a pro rata portion of the revenue generated by the Proton Therapy machine which is to be installed in Harley Street. The total revenue amount will be capped at £2.5 million per annum and the portion each Lender will receive will be calculated on a pro rata basis according to each Lender's loan amount of the total Secured Convertible Note. The first payment shall be made at the end of the first full calendar year of operations of the proton centre located on Harley Street (London, UK). An annual payment shall be made for 10 consecutive years. Even if the Secured Convertible Note is redeemed prior to the maturity date or converted into Ordinary Shares, the revenue share entitlement will continue for the full 10 years.

A summary of the other material terms of the Secured Convertible Note is set out in the Appendix of this announcement.

Total voting rights

Following Admission, the Company's enlarged issued share capital will comprise 538,437,229 Ordinary Shares, with voting rights. The Company does not hold any Ordinary Shares in treasury. Therefore, the total number of Ordinary Shares in the Company with voting rights will be 538,437,229. This figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA's Disclosure Guidance and Transparency Rules.

Rule 2.9 disclosure

In accordance with Rule 2.9 of the Takeover Code, AVO confirms that, following the receipt of funds under the Secured Convertible Note, it now has 6,379,725 senior secured fixed rate convertible loan notes ("Loan Notes") in issue (as at today's date), which have a maturity date of 11 January 2024 and are convertible into ordinary shares of 25p each in the Company at a conversion price representing a 20% discount to the next equity fund raising undertaken by the Company. The Loan Notes pay an interest rate of 1.25% per month and includes a revenue sharing agreement with Harley Street Centre.

AVO also confirms that as at the close of business on 30 May 2023 its issued share capital consisted of 537,481,209 ordinary shares of 25 pence each. The International Securities Identification Number for the Company's ordinary shares is GB00BD6SX109.

Advanced Oncotherapy plc	www.avoplc.com
Dr. Michael Sinclair, Executive Chairman	Tel: [phone]
Nicolas Serandour, CEO
WH Ireland Limited (Financial adviser)	Tel: [phone]
Antonio Bossi / James Bavister	[e-mail]
Allenby Capital Limited (Nomad and Joint Broker)
Nick Athanas / Piers Shimwell (Corporate Finance) Amrit Nahal / Matt Butlin (Sales & Corporate Broking)	Tel: [phone]
SI Capital Ltd (Joint Broker)
Nick Emerson	Tel: [phone]
Jon Levinson	Tel: [phone]

About Advanced Oncotherapy Plc www.avoplc.com

Advanced Oncotherapy, a UK headquartered company with offices in London, Geneva, The Netherlands and in the USA, is a provider of particle therapy with protons that harnesses the best in modern technology. Advanced Oncotherapy's team "ADAM," based in Geneva, focuses on the development of a proprietary proton accelerator called, Linac Image Guided Hadron Technology (LIGHT). LIGHT's compact configuration delivers proton beams in a way that facilitates greater precision and electronic control.

Advanced Oncotherapy will offer healthcare providers affordable systems that will enable them to treat cancer with innovative technology as well as expected lower treatment-related side effects.

Advanced Oncotherapy continually monitors the market for any emerging improvements in delivering proton therapy and actively seeks working relationships with providers of these innovative technologies. Through these relationships, the Company will remain the prime provider of an innovative and cost-effective system for particle therapy with protons.

Appendix

Secured Convertible Note

Financing instrument	Secured interest-bearing convertible facility
Principal	Up to £15 million
Maturity Date	9 months from the date of the secured convertible loan note agreement
Conversion	Option to convert prior to the Maturity Date at 20% discount to the next equity fund raising of the Company
Interest Rate	Fixed interest of 1.25% per month until the earliest of the full redemption or the conversion of the loan
Revenue share entitlement for the Harley Street machine	The Operator of the Harley Street Centre shall pay to the Lenders a pro rata portion of the revenue the Operator will receive from the Proton Therapy machine which is to be installed in Harley Street. The total revenue amount will be capped at £2.5 million per annum and the portion each Lender will receive will be calculated on a pro rata basis according to each Lender's loan amount of the total Secured Convertible Note. The first payment shall be made at the end of the first full calendar year of operations of the proton centre located on Harley Street (London, UK). An annual payment shall be made for 10 consecutive years. Even if the Secured Convertible Note is redeemed prior to the maturity date or converted into Ordinary Shares, the revenue share entitlement will continue for the full 10 years.
Security	Secured against the same assets as the existing facilities in place with Nerano Pharma Ltd, on a pari passu basis, such as the LIGHT components being built in Daresbury and Geneva, associated intellectual property and the property at Harley St.
Assignment and transfer by the Lender	All transfers and assignments are subject to the Lender receiving the Company's prior consent not to be unreasonably withheld. Such proposed transfer or assignment will not be permitted when the proposed transferee or assignee is a person whose principal business or material activity is investing in distressed debt or the purchase of loans or other debt securities with the intention of (or view to) owning the equity (loan to own) or gaining control of a business or exploiting holdout or blocking positions.
AOB	In the event other investors wish to subscribe to this instrument up to a maximum aggregated amount of £15 million those investors would benefit from the same terms as detailed above, notably in relation to the interest rate and (on a pro rata basis) the security package and revenue share entitlement. Any subscription under the Secured Convertible Note is subject to the consent of the Lenders and Nerano Pharma Ltd ("Nerano") and disclosure to the Lenders and Nerano of the identity of such new subscriber.

 

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