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Medicrea Announces $30 Million Senior Secured Notes Issue and a Warrants Issue wholly subscribed by Perceptive Advisors

November 27, 2018

LYON, France & NEW YORK--(BUSINESS WIRE)--Nov 27, 2018--The Medicrea Group (Euronext Growth Paris: FR0004178572- ALMED ; OTCQX Best Market – MRNTY & MRNTF), pioneering the transformation of spinal surgery through Artificial Intelligence, predictive modeling and patient specific implants with its UNiD™ ASI (Adaptive Spine Intelligence) proprietary software platform, services and technologies, today announced the closing of a $30 million senior secured notes issue by Medicrea and wholly subscribed by Perceptive Advisors, a leading multi-strategy healthcare investment firm. In conjunction with the senior secured notes, Medicrea has issued to Perceptive Advisors warrants for the Company’s new ordinary shares.

Denys Sournac, Chairman of the Board of Directors and Chief Executive Officer, states “We are glad to execute this financing with Perceptive Advisors. The new secured notes will give us the necessary capital to continue to fuel our UNiD™ ASI growth strategy in the United States and will give us the required funds to continue the development of other proprietary products. We look forward to working with Perceptive, one of the leading healthcare focused investment firms in the world. We believe this refinancing is another validation of our proprietary, patient specific technology focused on restoring sagittal and coronal alignment.”

Sam Chawla, Portfolio Manager at Perceptive Advisors states, “We are excited about this investment in Medicrea. This refinancing retires most of the Company’s existing debt, and gives the company the financial flexibility to accelerate UNID™ ASI adoption. The company has a unique service and product offering in the Spine market and has delivered superior patient outcomes. With a clean capitalization, simplified balance sheet, and excess cash, Medicrea has a significant opportunity to grow over the coming years.”

Key Terms of the Notes

The refinancing facility will consist of $30 million senior secured and guaranteed notes, governed by New-York law with coupon based on the greater of Three-Month LIBOR or 2.5% plus a margin of 8.5%. The notes will be issued at par value on the 27 th of November 2018, the expected date for the settlement and delivery, and will mature on the 27 th of November 2022. The notes will be guaranteed by Medicrea USA Corp, a 100 % fully owned subsidiary of Medicrea and will be secured by pledges on certain assets and receivables of the Group.

This refinancing will help Medicrea fund its UNiD ASI growth strategy in the United States as well as continue to focus on new product development. Five years after its initial launch in September 2013, over 3,000 patients have benefited from UNiD™ ASI 100% proprietary pre-operative planning technologies and services associated with patient-specific spinal realignment rods. UNiD products have seen a strong acceleration in adoption rate in 2018 especially in the USA (+62% cases year-to-date 2018 and +90% in Q3 2018).

Medicrea has also retired all of its outstanding €15 million convertible debt with Athyrium Capital Management and will use the proceeds to pay down portions of other secured outstanding debt for a total amount of €1.55 million.

Medicrea believes this refinancing (excluding the exercise of the warrants) should support the development of the Company until it reaches operational profitability.

Key Terms of the Warrants

Perceptive Credit Holdings II,LP subscribed to 1,000,000 warrants. The settlement and delivery of the warrants should take place on the 27 th of November, 2018. These warrants will not be subject to a request for admission to trading on the Euronext Growth market in Paris and will therefore not be listed.

One warrant entitles its holder to subscribe to one new Medicrea International ordinary share, at an exercise price of € 2.19, corresponding to the volume-weighted average of the share prices of the last 10 trading days prior to the fixing of the subscription price, decreased by a 10 % discount pursuant to the 14 th resolution of the General Meeting of May 17, 2018. The warrants will be exercisable for a period of seven years after their issuance.

The new shares to be issued upon exercise of the warrants will carry current dividend rights and will be tradable on Euronext Growth and will be listed on the same line as the existing shares (ISIN : FR0004178572).

The shares that would be issued in the event of the exercise of all the warrants represent 4.93% of the Company’s share capital as of today (on a fully diluted basis).

For illustrative purposes, the interest of a shareholder holding 1% of the share capital of Medicrea would be brought to 0.94% if all the warrants were to be exercised.

Furthermore, the table below presents the potential cumulative dilution in the event that all outstanding warrants, options, and other securities that have the potential to be converted into ordinary shares are exercised (including all the warrants issued since 2017, the stocks options and the potential free allocations of shares):

1 Average exercise price of the stocks options

To the Company’s knowledge, the distribution of the shareholders holding more than 5% of the share capital of the Company on a non-diluted basis before and after the exercise of the warrants is as follows:

Legal Framework of the Issuance of the Warrants

Using the delegation of powers granted by the General Meeting of May 17, 2018, pursuant to the 14 th resolution, the Board of Directors decided on November 26, 2018 the issuance of 1,000,000 warrants in favor of a category of investors as defined in the 14 th resolution of the said meeting in accordance with the provisions of Article L. 225-138 of the French Commercial Code, i.e. funds and/or investment companies with an international dimension (i. e.: carrying out financial operations in several countries), operating in the field of health and/or medical devices and each of which would participate in the operation for an amount at least equal to €100,000 or the equivalent of this amount in foreign currency (in accordance with the provisions of Article 211-2 3° of the General Regulations of French Autorité des Marchés Financiers).

It should be specified that none of the current shareholders or officers of Medicrea International are among the beneficiaries of the operation.

It should be noted that the aforementioned issuance of warrants did not give rise to, nor will it give rise to, the establishment of a prospectus subject to approval by the French Autorité des Marchés Financiers.

Risk factors

The risk factors related to Medicrea International and its activities are presented in the registration document ( document de référence ) filed with the AMF under number R.18-063 on September 6, 2018, which is available free of charge on the websites of the Company ( www.medicrea.com ) and/or the AMF ( www.amf-france.org ).

Craig-Hallum Capital Group LLC acted as exclusive financial advisor and sole placement agent to Medicrea in this transaction.

Next press release: 2018 annual sales on January 15, 2019 after market

About MEDICREA INTERNATIONAL ( www.medicrea.com )

Through the lens of predictive medicine, Medicrea leverages its proprietary software analysis tools with big data and machine learning technologies supported by an expansive collection of clinical and scientific data. The Company is well-placed to streamline the efficiency of spinal care, reduce procedural complications and limit time spent in the operating room.

Operating in a $10 billion marketplace, Medicrea is a Small and Medium sized Enterprise (SME) with 210 employees worldwide, which includes 50 who are based in the U.S. The Company has an ultra-modern manufacturing facility in Lyon, France housing the development and production of 3D-printed titanium patient specific implants.

Connect with Medicrea®

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Medicrea®

Medicrea is listed on

EURONEXT Growth Paris

ISIN: FR 0004178572

Ticker: ALMED

LEI: 969500BR1CPTYMTJBA37

Medicrea is traded on

OTCQX Best Market

Tickers: MRNTY & MRNTF

Disclaimer

In France, the offer of the notes and warrants described above will take place solely as a reserved offering in accordance with Article L. 225-138 of the Code de commerce and applicable regulations. The offering does not constitute a public offering in France, as defined in Article L. 411-1 of the French Code monétaire et financier and no prospectus reviewed or approved by the French Autorité des marchés financiers will be published.

With respect to Member States of the European Economic Area that have transposed European Directive 2003/71/EC of the European Parliament and European Council (as amended, in particular by Directive 2010/73/EU to the extent that the said Directive has been transposed into each Member State of the European Economic Area) (the “ Prospectus Directive ”), no action has been taken or will be taken to permit a public offering of the securities referred to in this press release which would require the publication of a prospectus in any Member State.

No action has been undertaken or will be undertaken to make available any securities to any retail investor in the European Economic Area.

This press release and the information it contains is not an offer to subscribe for or sell, nor the solicitation of an offer to subscribe for or buy, securities of Medicrea in the United States or any other jurisdiction where restrictions may apply. Securities may not be offered or sold in the United States absent registration or an exemption from registration under the US Securities Act of 1933, as amended (the “ U.S. Securities Act ”), it being specified that Medicrea securities have not been and will not be registered in accordance with the U.S. Securities Act and that Medicrea does not intend to conduct a public offering in the United States, or in any other jurisdiction.

This distribution of this press release may be subject to legal or regulatory restrictions in certain jurisdictions. Any person who comes into possession of this press release must inform him or herself of and comply with any such restrictions.

View source version on businesswire.com:https://www.businesswire.com/news/home/20181126005840/en/

CONTACT: Denys SOURNAC

Founder, Chairman and CEO

dsournac@medicrea.comFabrice KILFIGER

Chief Financial Officer

fkilfiger@medicrea.com

Tél. : +33 (0)4 72 01 87 87

KEYWORD: UNITED STATES EUROPE NORTH AMERICA FRANCE NEW YORK

INDUSTRY KEYWORD: SURGERY HEALTH MEDICAL DEVICES PROFESSIONAL SERVICES FINANCE GENERAL HEALTH

SOURCE: The Medicrea Group

Copyright Business Wire 2018.

PUB: 11/27/2018 02:00 AM/DISC: 11/27/2018 02:01 AM

http://www.businesswire.com/news/home/20181126005840/en

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