DEFA14A: NovaBay Pharmaceuticals Accepts Revised PRN Offer, Purchase Price Increased to $11.5 Million

NovaBay Pharmaceuticals has accepted a revised offer from PRN Physician Recommended Nutriceuticals, increasing the purchase price for NovaBay's eyecare business to $11.5 million.

Summary

• NovaBay Pharmaceuticals has accepted a revised transaction proposal from PRN Physician Recommended Nutriceuticals, LLC (PRN) to increase the base purchase price for the Company's eyecare business from $9.5 million to $11.5 million.
• The Company has entered into an amendment to its previously announced Asset Purchase Agreement, dated September 19, 2024, with PRN.
• The transaction with PRN remains subject to certain closing conditions, including receiving stockholder approval.
• The amendment includes the removal of debt financing contingencies for PRN, a secured promissory note (Bridge Loan) for up to $1.0 million from PRN to NovaBay, and an equity funding commitment letter from RoundTable Healthcare Partners V, L.P.
• The Board of Directors determined that an unsolicited proposal from Refresh Acquisitions BidCo LLC was no longer a Superior Proposal.
• The Special Meeting of the Company's stockholders to approve the transaction with PRN remains scheduled for November 22, 2024.
• The Board continues to unanimously recommend that stockholders approve the pending transaction with PRN, as well as the potential voluntary liquidation and dissolution of the Company at the Special Meeting.

Sentiment

Score: 7

Explanation: The sentiment is cautiously optimistic. The increased purchase price and financing commitments are positive, but the deal is still subject to stockholder approval and closing conditions. The end of engagement with Refresh is a negative.

Positives

• The base purchase price for the Avenova brand has increased to $11.5 million.
• PRN is providing a secured promissory note for up to $1.0 million to be used for working capital purposes.
• PRN has provided an equity funding commitment letter, demonstrating financial backing for the transaction.
• The Board of Directors continues to unanimously recommend that stockholders approve the pending transaction with PRN.

Negatives

• The transaction is still subject to stockholder approval and other closing conditions, creating uncertainty.
• The company ended its engagement with Refresh in accordance with the terms of the PRN APA.

Risks

• The transaction is subject to closing conditions, including stockholder approval, which may not be obtained.
• Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially.

Future Outlook

The Company intends to provide its stockholders with additional supplemental disclosure to the definitive proxy statement and will file relevant materials with the SEC.

Management Comments

• We are pleased to accept PRNs revised offer for the Avenova brand and continue our efforts to obtain stockholder approval.
• With the newly added value, we truly believe this deal is in the best interests of our stockholders, said Justin Hall, NovaBay CEO.

Industry Context

The announcement reflects ongoing consolidation and strategic realignments within the eyecare industry, with companies seeking to optimize their portfolios and focus on core competencies.

Comparison to Industry Standards

• Comparable transactions in the pharmaceutical and healthcare sectors often involve similar deal structures, including base purchase price adjustments, earn-outs, and financing contingencies.
• The equity funding commitment letter from RoundTable Healthcare Partners is a common mechanism to ensure the financial viability of the acquiring entity.
• The use of a bridge loan is a typical strategy to provide short-term working capital to the target company during the transaction period.

Stakeholder Impact

• Shareholders are urged to vote on the proposed transaction with PRN and the potential voluntary liquidation and dissolution of the Company.
• Employees of the eyecare business may be affected by the transaction, depending on the plans of the acquiring company.
• Customers of Avenova products should expect a continuation of product availability under the new ownership.

Next Steps

• Obtain stockholder approval for the transaction with PRN at the Special Meeting scheduled for November 22, 2024.
• File additional supplemental disclosure to the definitive proxy statement with the SEC.
• Fulfill closing conditions to complete the transaction with PRN.

Key Dates

Keywords

PRN Physician Recommended Nutriceuticals, Avenova, Asset Purchase Agreement, Acquisition Proposal, Stockholder Approval, Bridge Loan, NovaBay Pharmaceuticals, Eyecare Business