Vancouver, BC - Forbes Medi Tech Inc. (TSE:FMI; NASDAQ:FMTI) is pleased to announce it will receive a US$3 million advance payment from Phyto-Source LP, its manufacturing joint venture with Chusei (USA) Inc. The payment is towards a US$4 million loan made by Forbes Medi-Tech during the formation of the joint venture. Phyto-Source has secured funding for the advanced payment from the Southwest Bank of Texas by way of a US$ 3 million, three year term loan at an interest rate of prime plus one percent or 6% fixed. The bank has also agreed to set up a US$1.5 million revolving line of credit for the joint venture. The re-payment of the term loan and any funds drawn on the line of credit will be the responsibility of Phyto-Source, secured against the joint venture_s assets and will be guaranteed by Phyto-Source_s joint venture partners Forbes Medi-Tech and Chusei USA.
The ability of Phyto-Source to secure this financing is a function of its growing financial strength gained through demonstrated sales and production capabilities as well as its track record with the Southwest Bank of Texas.
On completion of the repayment to the Southwest Bank of Texas, the remaining $1 million will be paid to Forbes through future sales of Phyto-Source_s sterol-based ingredients. The transaction is subject to preparation and execution of formal loan documentation and such regulatory approvals as may be required and is expected to close on or before August 30th.
"With no dilution to shareholders and the favourable terms provided, this financing offers the best possible solution to meeting our capital requirements," said Charles Butt, President & CEO of Forbes Medi-Tech Inc. "Given the growth of our nutraceutical business, we will continue to benefit from this strengthening source of revenue," said Butt.
The US$3 million will be used by Forbes to fund further research on the VPx library of compounds and the payment of approximately US$1.0 million to Novartis towards the settlement of the Master Licence Agreement announced in June 2002. The term loan will allow Phyto-Source to pay down its outstanding loan to Forbes and the line of credit will be used for working capital. Based upon the Company_s financial position, burn rate and future revenue outlook, Forbes is anticipated to have enough funds to operate through the end of 2004.
About Phyto-Source, LP
Phyto-Source, LP is a 50-50 manufacturing joint venture between Forbes and Chusei (USA) Inc. located in Pasadena, Texas. The Phyto-Source facility is currently the world_s largest wood sterol manufacturing plant capable of producing 1,000 metric tonnes annually to Good Manufacturing Practice (GMP) standards. The plant, is a modular design, which can be expanded to accommodate the growing demand for the Company_s sterol-based ingredients.
About Southwest Bank of Texas
Southwest Bank of Texas is the largest independent bank headquartered in Houston, Texas, with $5.1 billion in assets. The Bank focuses on commercial lending and treasury management for businesses, private banking, wealth management and trust services for families and individuals, and retail and mortgage banking services. The Bank has 34 full-service branches located throughout the Houston metropolitan area.
About Forbes Medi-Tech Inc.
Forbes Medi-Tech Inc. is a biopharmaceutical company dedicated to the research, development and commercialization of innovative prescription pharmaceutical and nutraceutical products for the prevention and treatment of cardiovascular and related diseases. Forbes' scientific platform is based on core sterol technology. By extracting plant sterols from by-products of the forestry industry, Forbes has developed cholesterol-lowering agents for use in pharmaceutical compounds, functional foods and dietary supplements.