Newcourt (NASDAQ:NCAC) announced in an 8-K this morning that it has secured an aggregate of $12.5 million in convertible notes for its merger with psychedelic medicine company Psyence (CSE:PSYG).
The notes will consist of up to four senior secured convertible notes, issuable to the purchaser at or after the closing, in exchange for up to $10 million in subscription amounts.
The issuance of the tranche notes each involves a principal amount of $3.12 million in exchange for subscription amounts totaling $2.5 million.
While the first tranche note is contingent upon the completion of the combination with Psyence, the second tranche note allows for adjustments based on the market value traded. The purchaser may invest additional amounts over time to fulfill the second tranche note.
The third and fourth tranche notes, if issued, follow a similar structure with a principal of $3.12 million exchanged for $2.5 million in subscription amounts.
Interest will begin accruing at 8.0% per annum based on the outstanding principal amount of the note, payable monthly in cash or common shares.
Additionally, in consideration of the willingness of the purchaser, shareholders will deliver a structuring fee of common shares with 1.3 million structuring shares delivered at the first tranche closing. Following the closing, 1.7 million structuring shares will be delivered under the terms outlined in the call option agreements to be entered into between the purchaser and certain shareholders.
In connection with the securities purchase agreement, the sponsor and Psyence Group will enter into a lock-up agreement for 180 days following the closing of the combination.
Furthermore, the parties agreed to waive the minimum cash closing condition of $20 million and the investment condition stating that the PIPE should be ready to occur concurrently with the closing.
Newcourt announced its deal with Psyence in January 2023. As of now, the SPAC faces a completion deadline of January 22, but is looking to hold a shareholder meeting to extend its timeline. The Canada-listed company is developing psychedelic drug candidates to potentially treat patients in palliative care and those with severe psychological conditions.
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