Organogenesis Holdings Inc. recently announced a private placement offering of Series A Convertible Preferred Stock, which is expected to raise gross proceeds of $130 million. The net proceeds will be used for various purposes, including funding strategic growth initiatives, repurchasing shares of the company's common stock, and enhancing the company's balance sheet flexibility.
The private placement involves the sale of Series A Convertible Preferred Stock to affiliates of Avista Healthcare Partners, with the net proceeds designated for a range of strategic uses, including operating and commercial activities, clinical development programs, working capital, capital expenditures, debt repayment, and general corporate purposes.
Part of the net proceeds, approximately $23.5 million, will be allocated to repurchase 7,421,731 shares of the company's Class A common stock from certain directors and their affiliates at a price per share of $3.1597.
As a result of this private placement, Garrett Lustig, a principal at Avista Healthcare Partners, has been appointed to the company's board of directors, effective November 12, 2024.
The Series A Convertible Preferred Stock will be convertible into the company's common stock, with an initial conversion rate of 263.7358 shares of common stock per $1,000 of liquidation preference, implying a conversion price of $3.79 per share. The preferred stock will also carry an 8% cumulative annual dividend, compounded quarterly, and payable in cash or in kind at the company's option.
It's worth noting that the preferred stock will vote with the common stock on an as-converted basis, and the investors are entitled to a minimum liquidation preference of $1,500 per share of preferred stock upon a change of control of the company on or before November 12, 2026.
Truist Securities acted as the sole placement agent, and Foley Hoag LLP and Ropes & Gray LLP provided legal counsel to the company and Avista Healthcare Partners, respectively, regarding the transaction.
This private placement offering represents a significant move by Organogenesis Holdings Inc. to secure strategic growth capital and enhance its financial flexibility, as indicated by the company’s president, chief executive officer, and chair of the board, Gary S. Gillheeney, Sr.
The announcement of this private placement offering underscores the company’s commitment to executing its mission and leveraging the expertise of Avista Healthcare Partners as a strategic partner. Thompson Dean, chairman of Avista Healthcare Partners, expressed confidence in the potential of Organogenesis to advance regenerative medicine and create value for patients, investors, employees, and key stakeholders.
The press release also includes a disclaimer indicating that the securities being issued and sold in the private placement have not been registered under the Securities Act of 1933, as amended, and are being issued and sold in reliance on certain exemptions.
As a result of these announcements, the company's shares have moved 22.3% on the market, and are now trading at a price of $4.22. For more information, read the company's full 8-K submission here.
