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Shortly after revealing the details behind a bold restructuring effort, GeoPharma Inc. announced that its president has resigned.
Last week, the Largo-based company explained the steps it took to reduce $15 million in borrowings to $3 million, including the sale of its subsidiary to a holding company whose stock it would later own. (A more in-depth explanation is available below.)
Now, a new release issued by the company shows that president Kotha Sekharam chose to respond to those actions by stepping down from his post. Along with Sekharam, Mandeep Taneja, the company's general counsel, is also resigning.
Investors appear to be low on GeoPharma's latest activity; while its 52-week high pushed the firm's common stock above the $1 mark (symbol: GORX.PK), shares are now consistently trading below $0.10.
From Aug. 6:
GeoPharma Inc. took several complicated steps this week to make good with its senior secured lender, Whitebox Pharmaceutical Growth Fund Ltd., to which it owed $15 million at the end of last month.
First, the Largo-based company sold all the assets of Belcher Pharmaceuticals Inc., its subsidiary firm, along with a 51% ownership stake in that subsidiary to a privately owned company — the aptly named Belcher Pharmaceuticals Acquisition LLC. In exchange, GeoPharma received $3 million in cash, along with a low-priority equity stake in the LLC to which it sold the subsidiary.
GeoPharma then took $2 million of that money and packaged it with ownership of its headquarters building on Bryan Dairy Road — plus 5 million shares of GeoPharma common stock — to deliver to Whitebox. That reduced its $15 million debt to a $3 million subordinated note that will mature in four years.
Additionally, the company restructured with Midsummer Investment Ltd., which owns preferred stock in the company, to reduce its annual cash outlays. To secure new terms, the company gave Midsummer an extra 2 million shares of common stock.
The latest moves fail to provide GeoPharma with much working capital going forward, the company said in a release, but the company hopes the restructuring allows it to focus more efforts on profitability, rather than simple debt management.
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