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Cytori (CYTX) Amends warrants reducing dilutive share count in cashless exercise

December 18, 2015 7:36am

More shares but, cleans-up balance sheet and equity structure

And, updates 2015 operating cash burn guidance … decrease - BUY

CYTX has entered into definitive agreements with certain holders of approximately 100% of its outstanding Series A-1 and A-2 warrants issued in May and August of 2015 as well as warrants issued in October 2014.

The agreements are intended to improve the financial flexibility of CYTX, reduce the fully diluted share count, remove potentially dilutive effects of certain warrant provisions that provided for resets in warrant exercise price in potential future transactions, and provide greater freedom for the Company to use its ATM or ”at-the-market offering” program.

If all warrant holders elect to engage in these cashless exercises, CYTX will issue an aggregate of approximately 36.5 M common shares pursuant to such exercises.

The Bottom Line: Under the terms of the agreements, the “Consenting Holders” of warrants will receive approximately 0.73 common shares for each cashless exercise of a warrant on a blended average basis, with specific conversion factors dependent on the class of warrant held. As of 9/30/15, approximately 50.1 M warrants with anti-dilution price protection were outstanding.

As a result of these anticipated warrant exercises, CYTX expects that, as of the close business on 12/31/15, there will be approximately 195 M common shares issued and outstanding and no warrants with anti-dilution price protection. These exercises simplify CYTX’s balance sheet and equity structure;

On an additional note, the US osteoarthritis and U.S. and EU scleroderma programs will … now have an easier partnering capacity or ability;

Also, based on continued expense reduction initiative, CYTX updated its 2015 operating cash burn guidance for the full year down to $22 M … $3 M less than its initial guidance of $25 M disclosed in the beginning of 2015.

I’d also expect a reverse “movement” of the shares in the future to comply with NASDAQ listing and further the expansion of the share pricing …

CYTX closed at $0.27 - BUY

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