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Great Basin in Default of Senior Notes for $18.3M

NEW YORK (GenomeWeb) – Great Basin Scientific Basin today said in a document filed with the US Securities and Exchange Commission that it has received notice that it is in default of senior notes for $18.3 million. 

Great Basin received the notice from the Hudson Bay Master Fund on Wednesday alleging the molecular diagnostics firm has admitted it is unable to pay its debts and the alleged admission constitutes an event of default. It and Hudson Bay have begun discussions around leniency on the default, but if they cannot reach an agreement, Great Basin would have to pay the full amount due under the senior notes agreement, including principal, interest, and an event of default redemption premium, totaling $18.3 million. 

The original principal amount on the senior notes was $20.3 million. 

Great Basin said in its SEC document that it does not have funds to repay the notes and if forebearance is not granted, it may have to cease operations. In addition to Hudson Bay, there are five other holders of the notes, all of whom could declare an event of default. If that were to happen, Great Basin would owe an additional $7.3 million in principal, interest, and the event of default redemption premium. 

The company said in other SEC documents earlier this week that due to a shortage of funds, it is unable to meet its payment obligations to certain suppliers and service providers and is unable to satisfy its ordinary working capital requirements. For the same reason, the firm will also not be able to complete its financial statements and related disclosures for the second quarter, and will not be able to file its Form 10-Q within the required timeframe. 

Great Basin also said that on Aug. 10, it implemented a furlough of 57 employees, including its Chief Technology Officer and Senior VP of Research Robert Jenison. The furlough was designed as a cost-cutting measure, and there is no guarantee that the firm will be able to reemploy the furloughed employees. 

Earlier this year, the company announced a restructuring of its business, which included laying off 50 employees. The firm closed a $2.1 million offering of its securities in June.