aibioMesoblast signs option to issue up to US$50 million of convertible notes
Tickers MSB
The notes carry a 5% coupon and convert at US$16.25 per ADR. Issuance depends on shareholder approval at the upcoming annual general meeting.
Key facts
- Company
- Mesoblast Limited (ASX: MSB)
- News type
- Listings
- Primary source
- Mesoblast Limited 6-K (2025-09-04)
Mesoblast Limited (ASX: MSB; Nasdaq: MESO) has signed convertible note subscription agreements with SurgCenter principals and existing shareholders Gregory George and William Gueck. The agreements give Mesoblast the option, at its sole discretion, to issue up to US$50.0 million (A$76.8 million) of unsecured convertible notes. The announcement is dated September 4 in Melbourne and September 3 in New York.
When the notes can be issued
Mesoblast may issue the notes in tranches of US$10 million, but only after shareholder approval at the upcoming annual general meeting. The proceeds would repay or reduce amounts owed to its secured lenders under existing loan agreements, and fund general working capital. The release does not name those secured lenders or give the amounts owed to them. It names no bank, placement agent or counsel.
The terms
The notes mature five years after the first issuance, unless they are redeemed or converted earlier. They carry a 5% coupon per annum on face value. Investors may convert into ordinary shares or American Depositary Receipts (ADRs) at US$16.25 per ADR, equal to A$2.501 per ASX-listed share. The company says that conversion price is 126% of its last Nasdaq closing price and a 29% premium to the last ASX close. The conversion price adjusts for future share issues, capital reductions, share consolidations and other corporate actions.
The investors collectively receive a US$100,000 commitment fee. Subject to shareholder approval, they also receive 2 million warrants over 2 million ordinary shares, or 200,000 ADRs, for entering into the option. A further 3 million warrants, over 3 million ordinary shares, become issuable if Mesoblast exercises the option. The warrants carry the same exercise price as the conversion price and run four years from the first issuance of warrants. The release gives no total count of shares that would be issued on conversion.
Chief Executive Silviu Itescu said the notes help the company "optimize its capital structure" while it supports its pipeline, and he thanked its major shareholders for their support.
Who is investing
Gregory George is a major shareholder. According to the 20-F for the year ended June 30, 2025, filed August 29, 2025, Mesoblast appointed Dr. Gregory George, its largest shareholder, to the board in February 2025. The release does not mention that board seat. The 20-F also records that a completed global private placement raised approximately US$160.0 million (A$260 million) in January 2025, placed primarily with existing major US, UK and Australian shareholders.
The commercial position
Mesoblast was incorporated on June 8, 2004, listed on the ASX in December 2004 and joined Nasdaq in November 2015. Its product Ryoncil (remestemcel-L-rknd) was approved by the FDA in December 2024 as the first mesenchymal stromal cell therapy in the United States. It is approved for steroid-refractory acute graft versus host disease in children 2 months of age and older.
The 20-F says more than 25 transplant centers have been onboarded since launch, as of its July 2025 update, and that coverage extends to over 250 million US lives insured by commercial and government payers. Federal Medicaid coverage is in place, and mandatory fee-for-service Medicaid coverage became effective July 1 in all US states. The company also says the FDA confirmed alignment on items for its Revascor (rexlemestrocel-L) confirmatory trial design.
The 20-F also records that a consolidated shareholder class action filed in the Federal Court of Australia in 2022 was announced as resolved in August 2024, subject to court approval. The settlement is funded entirely by insurers and includes no admission of liability.
What the filings leave open
The release gives no cash balance and no date for the shareholder vote. It does not say how much of the US$50.0 million would go to the secured lenders and how much to working capital, and it gives no timetable for any tranche beyond the annual meeting. The warrants also depend on shareholder approval, so their issue is not certain on the release's own terms.