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Clinical diagnostics company Novacyt will settle all outstanding debt obligations with Harbert European Growth Capital (HEGC) and Vatel Capital, it announced on Wednesday.
The AIM-traded firm said that under the arrangements, it would clear its debt obligations with HEGC and Vatel before the end of June.
In doing so, it would settle a total of €7m (£6.23m) of principal debt provided by the two lenders.
The €5m HEGC secured term loan, announced on 6 November, has a fixed interest rate of 11% per annum and is repayable over 48 months, with an initial 12-month interest only period followed by 36 equal monthly payments of interest and capital.
HEGC took a first ranking charge over the assets of the UK businesses with a pledge over Novacyt, which would be satisfied on full repayment of €6.1m, including €5m of capital, during June.
In May 2018, Novacyt entered into an unsecured convertible bond facility with Vatel for €4m to be repaid over three years at an interest rate of 7.4%.
Under the terms of an agreed restructure with Vatel, announced on 6 November, the interest rate was retrospectively increased to 8.9% effective 31 July 2019, and the term of the loan was extended by 12 months to May 2022, to reduce annual payments to Vatel.
The bond also carries a non-conversion premium of 0.1% when monthly repayments are made in cash.
Novacyt said Vatel had exercised its right to request conversion of all outstanding debt into new ordinary shares at a fixed conversion price of 70 euro cents each.
Thus, the remaining debt of €2.07m was converted into 2,952,681 ordinary shares, and no future or accrued interest would be payable as a result of the conversion.
Vatel agreed to a lock-in period for a certain number of the shares, under which 1,107,255 of them would not be sold or transferred before 31 December 2021, and a further 1,033,438 would not be sold or transferred before 31 March 2021.
The remaining 811,988 shares had no such restrictions.
Novacyt said the early settlement of the HEGC loan was being funded out of general cash resources.
As at 2 June, prior to the payment to HEGC, the group had a net cash balance of €25m, up from €1.8m at the end of December.
“We are pleased to announce early settlement of all of Novacyt's outstanding debt obligations, which has been made possible due to the company's strong cash generation so far in 2020,” said chief executive officer Graham Mullis.
“With significant order commitments and raw materials acquired for our Covid-19 test, and expected revenues from new products, we expect strong cash generation to continue.
“I would like to extend my thanks to HEGC and Vatel for supporting Novacyt during this time.”
At 1225 BST, shares in Novacyt were down 2.61% at 298p.