InVitro to Get Up to $2 Million in Funding Deal : Financing: The firm hopes a bridge loan from private investors and a management shake-up will help it in difficult times.
InVitro International Inc. said Friday that it has undergone a major restructuring of its top management and has arranged financing in a complicated deal that will provide as much as $2 million in much-needed funds.
The company hopes that its latest series of moves, which include a shake-up of the board of directors, will help it through difficult financial times it has been undergoing recently.
Under the terms of the bridge loan, provided by an unidentified consortium of private investors, the company said that it has received a commitment of at least $1 million and provisions for $1 million more, if needed, Chief Executive William Fisher said.
The one-year loans call for repayment of interest in preferred stock, Fisher said.
InVitro, considered a ground-breaker in creating an enterprise centered on the controversy of laboratory animal testing--the company makes test kits for eye- and skin-care companies that want to try out their products without using animals--said it has been hurt by slow sales.
The company began having cash-flow problems in April when it was unable to arrange a secondary stock offering to raise capital to tide it over. A deal in late summer with another group of private investors fell through, prompting the company to issue a statement that it was considering closing.
The company canceled appearances at trade shows and laid off 20 people in June. “We were going into a mode of watching every cent,” Fisher said. “It just got very, very tight.”
The company also needed funds to invest in the development, manufacture and distribution of a new test kit. That kit, now ready for market, enables researchers to test the corrosiveness of chemicals without having to apply them to the skins of live animals.
Fisher estimated that the potential market for such a test kit is valued at $100 million a year.
In addition to the financing, InVitro has arranged for Ropak Corp., which initially invested heavily in the test-kit maker, to give up rights to royalties. Instead, Ropak, a Fullerton-based packing maker, has accepted a 24% stake in InVitro, which used to be called Ropak Laboratories.
Ropak has signed an agreement not to sell that stock for at least a year.
The consortium of investors providing the bridge loan will be given the right to nominate two new members of InVitro’s board, Fisher said.
Those new board members will succeed Christopher P. Kelly and William H. Roper, who resigned on Wednesday, the company said. Two other board members, Alan M. Novich and Ricardo J. Soto, also resigned.
As a good-faith measure, Fisher, who is also a member of the board, has agreed to invest $50,000 in the company, while board members William M. Curtis and Virginia C. Gordon will invest $25,000 each.
InVitro’s stock closed at $1.56 a share Friday on the NASDAQ market, up 12 cents for the day.
