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TORONTO, Aug. 15, 2014 /CNW/ - Eastern Capital Limited ("Eastern") is pleased to announce that today it has closed the transaction with Resverlogix Corp. ("RVX"), previously announced on July 3, 2014 (the "Transaction"). Pursuant to the Transaction, RVX issued 5,000,000 share purchase warrants to Eastern in exchange for an increase of $30 million and extension of credit support for a loan previously extended by Citibank, N.A. ("Citibank") to RVX. Each warrant is exercisable at a price of $0.75 for a period of 5 years. The Transaction, including the issuance of the 5,000,000 share purchase warrants to Eastern, received conditional approval by the Toronto Stock Exchange (the "TSX") and shareholder approval of the majority of the votes cast by the shareholders of RVX, excluding Eastern, at a special meeting of the shareholders of RVX held on August 13, 2014.
RVX entered into a $25 million loan agreement with Citibank on August 27, 2012. Pursuant to an agreement entered into on March 8, 2013, Citibank increased the loan amount provided to RVX from $25 million to $38.8 million on the same terms as the initial loan agreement. The loan was secured by an irrevocable $38.8 million standby letter of credit (the "Letter of Credit") arranged by Eastern to be maintained until maturity of the loan on August 28, 2017. In connection with the Letter of Credit, RVX agreed to indemnify Eastern for all liabilities, costs and expenses arising from any payments made to Citibank under the Letter of Credit and RVX pledged its issued patents, certain patent applications and certain tax losses and pools to Eastern as security for its obligations under the indemnity. RVX also agreed to pay a guarantee fee to Eastern in the amount of 0.03% per annum on the average daily aggregate principal amount of the issued and undrawn Letter of Credit.
Pursuant to the agreement entered into on July 3, 2014 and conditional upon receiving the required approvals by RVX' shareholders, Citibank agreed to increase the loan amount provided to RVX from $38.8 million to $68.8 million on the same terms as the initial loan agreement. Eastern has agreed to increase the security provided by it to Citibank and to arrange for an increase of the Letter of Credit from $38.8 million to $68.8 million with corresponding changes to the indemnity, security and guarantee fee agreements with RVX.
Before giving effect to the Transaction, Eastern holds 14,965,307 shares of RVX and 2,578,232 share purchase warrants, which, assuming all warrants are exercised, represents approximately 19.97% of the common shares outstanding. After giving effect to the Transaction, assuming all warrants are exercised, Eastern will hold 22,543,539 shares of RVX representing approximately 24.27% of RVX's issued and outstanding common shares based on shares outstanding as at August 15, 2014.
The warrants are acquired for investment purposes only. In the future, Eastern or any of its joint actors may, subject to applicable law, acquire or dispose of common shares of RVX depending upon a number of factors, including general market and economic conditions and other available investment opportunities.
SOURCE Eastern Capital Limited