This morning, it is likely that the Kane Biotech Inc. (OTC:KBNIF) stock will come on the radars of investors owing to a key announcement from the company on Thursday. On April 11, the company announced that it had, on principle, reached an agreement with regards to the sale of the entirety of its interest in STEM Animal Health Inc.
The agreement had been reached with a third-party pharmaceutical multi-national firm on a cash-free, debt-free basis for $8,000,000. However, the sum would be subject to adjustments as per the provisions of the agreement, in addition to other considerations like the working capital adjustment and the net cash held with STEM Animal Health.
The company noted yesterday that it expected that it would generate net proceeds to the tune of $11.5 million from the sale of STEM Animal Health, and that would be inclusive of the cash deposits that had already been received. However, it was also revealed that the buyer was not a non-arm’s length party in relation to Kane Biotech.
It was also revealed that the company would also be eligible for $750000 in the form of sales-related milestone payments, which had not been included in the amount related to the sale. Additionally, Kane Biotech would also enter into transitional manufacturing and product development agreements with STEM Animal Health.
The net proceeds from the transaction would be used by Kane Biotech to pay its outstanding loan owed to Pivot Financial I Limited Partnership to the tune of around $6,700,000 and for general working capital-related purposes. Before the transaction had been agreed, Kane Biotech had received a total of $1,525,000 in the form of cash deposits from the purchaser, and that had also been applied towards the sale price. It may be a good move to keep an eye on Kane Biotech today.
