UBI Signs Term Sheet for A$8.5m Loan with 15% Interest and Royalty Terms
Universal Biosensors has signed a non-binding term sheet for an A$8.5 million senior secured loan with Viburnum Funds, alongside plans for an equity raising. The move comes with governance shifts, including a director resignation to avoid conflicts.
- Non-binding term sheet for A$8.5 million senior secured loan with Viburnum Funds
- Equity raising planned via Security Purchase Plan for existing securityholders
- Loan carries 15% interest and a perpetual royalty on water and wine testing strip revenues
- Non-Executive Director Craig Coleman resigns due to association with Viburnum
- Transaction subject to securityholder approval and other conditions
Funding Agreement in Principle
Universal Biosensors, a specialist in electrochemical biosensor technology, has taken a significant step toward securing additional capital by signing a non-binding term sheet with Viburnum Funds Pty Ltd for a senior secured loan facility of up to A$8.5 million. This agreement, while not yet legally binding, outlines the framework for a loan that could provide the company with much-needed working capital to support its ongoing operations and growth ambitions.
Loan Terms and Equity Raising
The proposed loan facility is structured in two tranches – an initial drawdown of A$3.5 million contingent on securityholder approval, followed by a potential second draw of up to A$5 million within 60 to 120 days, subject to Viburnum's approval. The loan carries a relatively high interest rate of 15% per annum, payable in capitalised instalments, alongside a perpetual royalty on revenues generated from the company’s water and wine testing strips. This royalty starts at 10% and could rise to 15% if the second tranche is utilised.
In addition to the loan, Universal Biosensors plans to launch an equity raising through a Security Purchase Plan, offering existing securityholders the chance to participate in the company’s future growth. This dual approach to funding reflects a strategic effort to balance debt with equity, potentially diluting current shareholders but providing essential capital.
Governance and Board Changes
In a move to maintain good corporate governance and avoid conflicts of interest, Non-Executive Director Craig Coleman, who is also the Executive Chairman and founding shareholder of Viburnum Funds, has resigned from the board. His departure underscores the close relationship between the company and its major financier, while also signalling a commitment to transparency as the funding deal progresses.
Conditions and Next Steps
The transaction remains subject to several conditions, including securityholder approval expected at a general meeting scheduled for late August 2025, completion of due diligence by Viburnum, and the divestment of certain healthcare and HRL assets. Viburnum will also gain the right to appoint an observer to board meetings, indicating a deeper involvement in the company’s strategic oversight.
While the term sheet sets out clear intentions, the non-binding nature means there is no guarantee the deal will be finalised on these terms. Investors will be watching closely for the outcomes of the upcoming general meeting and the progress of the equity raising, both critical to the company’s financial trajectory.
Bottom Line?
Universal Biosensors’ funding move and board reshuffle set the stage for a pivotal phase in its growth story, with key approvals looming.
Questions in the middle?
- Will securityholders approve the loan and equity raising at the upcoming general meeting?
- How will the perpetual royalty impact Universal Biosensors’ long-term revenue and profitability?
- What are the strategic plans for the divestment of healthcare and HRL assets prior to finalising the loan?