On November 12, 2018, the Company and InvaGen Pharmaceuticals Inc. (“InvaGen”), entered into definitive agreements with two closing stages for a proposed acquisition of the Company.  The transaction will be subject to Avenue’s stockholders’ and regulatory approvals, and other closing conditions.

 

At the first stage closing, which is anticipated in the first quarter of 2019, InvaGen will purchase 5,833,333 newly issued shares of Avenue’s common stock at $6.00 per share for a total consideration of $35.0 million. Simultaneously with the closing of the stock issuance, InvaGen will appoint three members (including one independent) on Avenue’s seven-member Board of Directors.

 

At the second stage closing, InvaGen will acquire the remaining shares of Avenue’s common stock, pursuant to a reverse triangular merger with Avenue remaining as the surviving entity, for up to $180.0 million in the aggregate. The second stage closing is subject to the satisfaction of certain closing conditions, including conditions pertaining to U.S. Food and Drug Administration approval, labeling, scheduling and the absence of any Risk Evolution and Mitigation Strategy (“REMS”) or similar restrictions in effect with respect to IV Tramadol.

 

 

Concurrently with the execution and delivery of the Stock Purchase and Merger Agreement, the Company and Invagen entered into a credit agreement (the “Credit Agreement”), pursuant to which Invagen will provide initial financing to the Company in an amount of up to $3.0 million in the form of a line of credit, up to the closing of the Stock Purchase Transaction. Any amounts drawn on the line of credit will be deducted from the aggregate consideration payable to the Company pursuant to the Stock Purchase Transaction. Subject to the terms and conditions described in the Stock Purchase and Merger Agreement, Invagen may also provide interim financing to the Company in an amount of up to $7.0 million during the time period between the Stock Purchase Transaction and the Merger Transaction. Any amounts drawn on the interim financing will be deducted from the aggregate consideration payable to Company stockholders by virtue of the Merger Transaction.

 

Concurrently with the execution and delivery of the Credit Agreement, Fortress and Invagen entered into a guaranty (the “Guaranty”), pursuant to which Fortress guaranteed the full payment to Invagen, when due, of all amounts of (x) all obligations of the Company to Invagen under the Credit Agreement, whether for principal interest, fees, charges, expenses or otherwise, and (y) any and all costs and expenses incurred by Invagen in enforcing any of its rights under the Guaranty.