BOSTON and SYDNEY – 2 July 2019 – GI Dynamics® Inc. (ASX: GID) (the Company), a medical device company that is developing EndoBarrier® for patients with type 2 diabetes and obesity confirms that, following the Company’s announcement on 1 July 2019, it has today issued a total of 453,609,963 CHESS Depositary Interests (CDIs) (representing 9,072,198 shares of common stock) to Crystal Amber Fund Limited (Crystal Amber).

The CDIs have been issued as a result of the conversion by Crystal Amber of the principal amounts and all interest accrued on the convertible notes issued by the Company to Crystal Amber on 30 May 2018 (May 2018 Convertible Note), 18 March 2019 (March 2019 Convertible Note) and 8 May 2019 (May 2019 Convertible Note).

Further details of the allotment of the CDIs as a result of the conversion of the May 2018 Convertible Note, the March 2019 Convertible Note and the May 2019 Convertible Note are set out below as well as in the attached Appendix 3B.

“Crystal Amber exercised its voluntary conversion rights of the 3 Convertible Notes described by us in the past, further summarized in this release,” said Scott Schorer, president and chief executive officer of GI Dynamics. “This conversion simplifies our capital and debt structure and ceases the continued accrual of interest on these Notes. We appreciate the continued support of Crystal Amber and our other shareholders, and look forward to making EndoBarrier and GI Dynamics successful.”

Please note that this announcement addresses three of the four convertible notes with Crystal Amber. The first note originally executed in June 2017 remains outstanding and is subject to the note extension.

May 2018 Convertible Note

At the election of Crystal Amber, the principal amount of the May 2018 Convertible Note, being US$1,750,000, plus the accrued interest in an amount of US$191,877, which together total US$1,941,877, has been converted into 134,852,549 CDIs (representing 2,697,050 shares of common stock) at a conversion price of US$0.0144 per CDI. The CDIs issued as a result of the conversion of the May 2018 Convertible Note rank equally in all respects with all other CDIs on issue. All principal and interest owed by the Company to Crystal Amber under the terms of the May 2018 Convertible Note has been satisfied in full by the issue of the relevant CDIs and the May 2018 Convertible Note has no further effect.

March 2019 Convertible Note

At the election of Crystal Amber, the principal amount of the March 2019 Convertible     Note, being US$1,000,000, plus the accrued interest in an amount of US$29,589, which together total US$1,029,589, has been converted into 81,070,003 CDIs (representing 1,621,400 shares of common stock) at a conversion price of US$0.0127 per CDI. The CDIs issued as a result of the conversion of the March 2019 Convertible Note rank equally in all respects with all other CDIs on issue. All principal and interest owed by the Company to Crystal Amber under the terms of the March 2019 Convertible Note has been satisfied in full by the issue of the relevant CDIs and the March 2019 Convertible Note has no further effect.

 May 2019 Convertible Note

At the election of Crystal Amber, the principal amount of the May 2019 Convertible Note, being US$3,000,000 (which was advanced in four tranches as previously announced), plus the accrued interest in an amount of US$18,629, which together total US$3,018,629, has been converted into 237,687,411 CDIs (representing 4,753,748 shares of common stock) at a conversion price of US$0.0127 per CDI. The CDIs issued as a result of the conversion of the May 2019 Convertible Note rank equally in all respects with all other CDIs on issue. All principal and interest owed by the Company to Crystal Amber under the terms of the May 2019 Convertible Note has been satisfied in full by the issue of the relevant CDIs and the May 2019 Convertible Note has no further effect.

Restrictions on Resale of Securities in the United States

None of the securities issuable under the convertible notes have been registered under the Securities Act of 1933, as amended (Act), or any state securities laws, and until so registered may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Act and applicable state securities laws. This announcement is not an offer to sell, nor a solicitation of an offer to buy any securities, nor shall there be any sale of these securities in any state or jurisdiction in which the offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction or an applicable exemption therefrom.

Restrictions on trading the CDIs on ASX

In accordance with the terms of the May 2018 Convertible Note, the March 2019 Convertible Note and the May 2019 Convertible Note, Crystal Amber is restricted from trading any of the above-mentioned CDIs that have been issued as a result of the conversion of the relevant convertible notes for a period of 12 months from 2 July 2019.

 

About GI Dynamics

GI Dynamics®, Inc. (ASX:GID) is the developer of EndoBarrier®, the first endoscopically-delivered device therapy for the treatment of type 2 diabetes and obesity. EndoBarrier is not approved for sale and is limited by federal law to investigational use only. Founded in 2003, GI Dynamics is headquartered in Boston, Massachusetts. For more information please visit www.gidynamics.com.

 

Forward-Looking Statements

This announcement may contain forward-looking statements. These statements are based on GI Dynamics management’s current estimates and expectations of future events as of the date of this announcement. Furthermore, the estimates are subject to several risks and uncertainties that could cause actual results to differ materially and adversely from those indicated in or implied by such forward-looking statements.

These risks and uncertainties include, but are not limited to, risks associated with our ability to continue to operate as a going concern; our ability to raise sufficient additional funds to continue operations and to conduct the planned pivotal trial of EndoBarrier in the United States (STEP-1); our ability to execute STEP-1 under FDA’s Investigational Device Exemption; our ability to enlist clinical trial sites and enroll patients in accordance with STEP-1; the risk that the FDA stops STEP-1 early as a result of the occurrence of certain safety events or does not approve an expansion of STEP-1; our ability to maintain compliance with our obligations under our existing convertible note and warrant agreements executed with Crystal Amber, including our obligations to make payment on the Note that is due on 1 October 2019; our ability to restructure the terms of the Note with Crystal Amber that is due on 1 October 2019 if we are unable to raise sufficient funds to enable us to fully repay such note when due; obtaining and maintaining regulatory approvals required to market and sell our products; the possibility that future clinical trials will not be successful or confirm earlier results; the timing and costs of clinical trials; the timing of regulatory submissions; the timing, receipt and maintenance of regulatory approvals; the timing and amount of other expenses; the timing and extent of third-party reimbursement; intellectual-property risk; risks related to excess inventory; risks related to assumptions regarding the size of the available market; the benefits of our products; product pricing; timing of product launches; future financial results; and other factors, including those described in our filings with the U.S. Securities and Exchange Commission.

Given these uncertainties, one should not place undue reliance on these forward-looking statements. We do not assume any obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events or otherwise, unless we are required to do so by law.

 

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