Wednesday, December 17, 2008

Implant debt deal pulls in $5.6M; two board members replaced

By Brendan Lynch

Implant Sciences Corp. has raised $5.6 million in a note and warrant sale. Wakefield-based Implant (AMEX: IMX), which makes sensors for the homeland security and defense markets, executed the repurchase agreement with DMRJ Group LLC.

As a condition of the financing, Implant agreed to replace two members of its board of directors — former SatCon Technology Corp. CEO David Eisenhaure and Michael Szycher — with directors chosen by DMRJ. Implant also issued DMRJ a five-year warrant to purchase 1 million shares of its common stock at an initial exercise price of 26 cents per share.

Under the deal, executed on Dec. 10, Implant issued a senior secured convertible debt to DMRJ in the principal amount of $5.6 million, with an 11 percent interest rate, at 26 cents per share. The terms of the deal require Implant to have prepaid $616,000 of interest upon the issuance of the note; repay $1 million worth of principal on Dec. 24, 2008; and repay the remaining principal, together with all outstanding interest and all other amounts due and owing under the note, on Dec. 10, 2009. In lieu of paying DMRJ commitment fees, closing fees or other fees, Implant transferred 1.5 million shares of common stock in Burlington-based medical devices firm CorNova Inc., in which Implant held about a 15 percent ownership stake.

Implant said it used about $1.5 million from the sale to repay debts, with the rest planned to be used for working capital and general corporate purposes.

DMRJ is a Delaware limited liability company affiliated with Platinum Partners Value Arbitrage Fund LP, an institutional investor with its investment manager headquartered in New York.