Provectus Biopharmaceuticals Inc. (NYSEMKT: PVCT) has kicked off a process or raising additional capital through securities offering. The type of fundraiser that Provectus is pursuing is something that managements of companies would normally try to avoid unless they have run out of attractive options. Equity offering destroys value for existing shareholders and it is the reason behind the selloff in the stock of Provectus immediately news entered the market that the company is selling new shares and warrant to purchase common shares.
However, Provectus Biopharmaceuticals Inc. (NYSEMKT: PVCT) is in need of cash and the management doesn’t appear interested in raising debt as it tries to keep the balance sheet clean and strong. The funds that will come from the securities offering will go into working capital and clinical development programs.
The company has not yet said how much it needs for clinical activities and working capital, but it has revealed the amount it is targeting from the securities fundraiser.
What’s on offer?
Provectus Biopharmaceuticals Inc. (NYSEMKT: PVCT)’s securities fundraiser consists of Series B convertible preferred shares and warrants to purchase common shares. As such, the company is offering 240,000 shares of the Series B type and warrants to purchase 24 million common shares. The Series B shares are convertible to 24 million common shares, the company said in a statement.
The pricing of the securities
Provectus has priced a securities package that consists of one Series B share and warrant to purchase one share of its common stock at $25. The company further said that each warrant will convert at the rate of $0.275 per share.
Provectus is expecting to generate $6 million in gross proceeds from the offering. However, the actual amount that it can spend on its programs will be less than that because of expenses and fees related to the securities offering.
2Q2016 highlights – Provectus Biopharmaceuticals Inc. (NYSEMKT: PVCT)
Provectus Biopharmaceuticals Inc. (NYSEMKT: PVCT) finished 2Q2016 with cash and equivalents of $4.89 million, which declined from $9.76 million in the prior quarter. The company further said its shareholders’ equity fall to $9.14 million in the latest quarter compared to $14.18 million in the previous quarter.