NEW YORK – Accelerate Diagnostics' shares closed down 23 percent on Tuesday after it announced it has closed transactions related to its restructuring support agreement.
The company's shares closed at $.79 per share on Tuesday on the Nasdaq. Earlier in the day, the Tucson, Arizona-based rapid diagnostics firm said it has simplified its capital structure, extended out its debt maturity by three and a half years and secured $24 million in new funding.
In early morning trading on Wednesday, however, the company's shares were up 9 percent.
Accelerate had announced in April a restructuring service agreement to solve its debt overhang caused by $57 million in 2.5 percent convertible notes that were due in March. In a statement on Tuesday, Accelerate CEO Jack Phillips said that the steps taken by the firm would help the firm accelerate the development of its next-generation Wave platform for the detection of sepsis and antimicrobial resistance.
The transactions include the exchange of about $57 million of its 2.50 percent convertible senior notes due in 2023 for 5 percent convertible senior notes due in 2026, bringing in $10 million of proceeds from the sale of additional notes for a total issuance of about $67 million of notes. Accelerate also converted about $36 million of secured promissory notes into common stock and converted about 3.9 million preferred shares into common stock.
The firm amended and closed a previously announced 2022 securities purchase agreement with the Jack W. Schuler Living Trust, which is the largest shareholder of the firm and an entity affiliated with Jack Schuler, a director of Accelerate Diagnostics, for $4 million of common stock at a purchase price of $.82 per share, entering into a new securities purchase agreement with the Trust for the sale before Dec. 15, 2023, of $10 million of common stock, in lieu of such sale at Accelerate's option, a backstop of the sale of $10 million of common stock in an underwritten public offering.
In a note to investors, Craig-Hallum analyst Alex Nowak said that Accelerate has "achieved a more promising outcome than investors may have anticipated."
He noted that the firm, through these transactions, "has effectively reduced the total debt from $93 million to $67 million and inflated basic shares outstanding from 104 million to 143 million." However, he also noted that should the debt be converted, that would add another 93.5 million common shares to Accelerate's outstanding share count.
Nowak maintained his Hold rating on Accelerate's stock but increased his price target to $.90 from a previous $.60 per share.