Full Press Release Details
Raises $12.7 Million in New Financing
to Use Proceeds for Clinical Trials, Product Marketing and Working
YORK, September 25, 2007 - Nephros, Inc. (AMEX: NEP) announced today
that it has entered into several subscription agreements whereby Lambda
Investors LLC, GPC 76 LLC, Lewis P. Schneider and Enso Global Equities
Partnership LP will collectively purchase an aggregate of approximately $12.7
million principal amount of Series A 10% Secured Convertible Notes due 2008
Nephros, for the face
with the Company entering into the subscription agreements, Nephros entered
an exchange agreement with Southpaw Credit Opportunity Master Fund LP, 3V
Capital Master Fund Ltd, Distressed/High Yield Trading Opportunities, Ltd.,
Partners, L.P. and LJHS Company, which each agreed to exchange the principal
accrued but unpaid interest under the outstanding $5,200,000 in initial
principal amount of the 6% Secured Convertible Notes due 2012 of Nephros, for
new Series B 10% Secured Convertible Notes due 2008, in an aggregate principal
amount of $5,300,000.
representing a majority of the outstanding shares of Nephros have agreed to
issuance of shares of the Company's common stock upon the conversion of the
Series A and Series B Notes and exercise of the Class D Warrants issuable upon
such conversion. Stockholders representing a majority of the
outstanding shares also adopted an amendment to Nephros' fourth amended and
restated certificate of incorporation to increase the authorized shares of
common stock of Nephros to 60 million. These approvals will become
effective twenty days after a definitive Schedule 14C Information Statement
sent or given the Company's stockholders.
approval does become effective, all principal and accrued but unpaid interest
under the new Series A and Series B notes will automatically convert to Nephros
common stock at a conversion price per share equal to $0.706. In the
case of the Series A Notes, Class D Warrants also will be issued for the
purchase of shares of common stock in the amount of 50% of the number of new
shares issued at conversion, with an exercise price per share of common stock
outstanding, the Series A and Series B Notes will accrue interest at a rate
10% per annum, compounded annually and payable in arrears at maturity or
conversion. The Series A and Series B Notes are secured by a first
lien and security interest on all of Nephros' assets. The Class D
Warrants, when issued, will have a term of five years and will be non-callable
today's announcement, Nephros will have the resources to accelerate and complete
its human clinical trial on the road to regulatory approval of the
Hemodiafiltration Module and OLp r MD 220 Hemodiafilter in the United
States," said Norman Barta, president and CEO. "At the same time,
we're placing our water filtration products on the fast track, moving forward
with our marketing and sales in the hospital environment as well as our related
military product development. We look forward to this exciting new
phase of progress for Nephros."
September 19, 2007, in conjunction with the closing of the financing, William
Fox resigned as Executive Chairman and director of the Board, and Judy S.
Slotkin, W. Townsend Ziebold, Jr. and Howard Davis resigned as directors of
Fox has been a dedicated and committed executive chairman for Nephros," noted
Dr. Eric A. Rose, lead director of the Company. "We wish him well in
his future endeavors. I also wish to acknowledge the good counsel of
Mr. Ziebold, Mr. Davis and Ms. Slotkin during their tenure on the Nephros
September 19, 2007, in conjunction with the closing of the financing, Paul
Mieyal and Arthur H. Amron were appointed directors of Nephros. Dr.
Mieyal and Mr. Amron are employed by Wexford Capital LLC, a registered
investment advisory firm that manages Lambda.
Mieyal is a Vice President of Wexford Capital. Prior to that, he was
Vice President in charge of health care investments for Wechsler & Co., Inc.
a private investment firm and registered broker dealer. Dr. Mieyal
serves as director of Danube Pharmaceuticals, inc., Epiphany Biosciences, Inc.,
GlobeImmune, Inc., Interventional Spine, Inc., Microbiogen Pty Ltd., Nile
Therapeutics, Inc., and Tigris Pharmaceuticals, Inc. Dr. Mieyal received his
Ph.D. in pharmacology from New York Medical College, a B.A. in chemistry and
psychology from Case Western Reserve University, and is a Chartered
is a partner of Wexford Capital and serves as its General Counsel. He
actively participates in various private equity transactions, particularly
the bankruptcy and restructuring areas, and has served on the board committees
of a number of public and private companies in which Wexford has held
investments. Mr. Amron holds a JD from Harvard University, a B.A. in
political theory from Colgate University, and is a member of the New York
scientific studies from experts in the field, its growing acceptance in Europe
and the limitations of the current standard of care in the U.S. are compelling
evidence that the Nephros Hemodiafiltration system holds great promise for
success," said Dr. Mieyal. "In addition, the critical need for water
free from bacteria, parasites and viruses, particularly in military, medical
emergency settings, makes the company's Dual Stage Ultrafilter (DSU) an
immediate and logical solution."
Inc., headquartered in New York, is a medical device company developing and
marketing products designed to improve the quality of life for the End-Stage
Renal Disease (ESRD) patient, while addressing the critical financial and
clinical needs of the care provider.
disease state characterized by the irreversible loss of kidney function. Nephros
believes that its products, particularly its Mid-Dilution Hemodiafiltration
therapy, are designed to remove a range of harmful substances more effectively,
and more cost-effectively, than existing ESRD treatment methods; particularly
with respect to substances known collectively as "middle molecules," due to
their molecular weight, that have been found to contribute to such conditions
dialysis-related amyloidosis, carpal tunnel syndrome, degenerative bone disease
and, ultimately, mortality in the ESRD patient. Nephros products are currently
being used in over fifty clinics in Europe, and are distributed in Italy, France
also markets a line of water filtration products, the Dual Stage Ultrafilter
(DSU). The Company's patented dual stage cold sterilization Ultrafilter has the
capability to filter out bacteria and, due to its exceptional filtration levels,
filter out many viruses and parasites. The DSU proprietary design provides
dual-stage filtration which reduces the risk of filtration failure. With initial
focus on health care, the DSU is in a pilot-use program at a major medical
center and has been selected for further development by the US Marine Corps.
Company considers the DSU a significant breakthrough in providing affordable
reliable water filtration. The DSU is based on Nephros' proprietary water
filtration technology originally designed for medical use in its H2H machine,
and is a complimentary product line to the Company's main focus, the ESRD