Investors also receive 30% warrant coverage
By Angela McDaniels
Tacoma, Wash., May 15 - A123 Systems, Inc. agreed on Friday to sell $50 million of 6% senior convertible notes due July 2013 to a group of institutional investors, according to an 8-K filing with the Securities and Exchange Commission.
The initial conversion price is $1.18, which is a 15% premium to the company's $1.03 closing share price on Friday.
Beginning Aug. 15, holders have the option to convert using a floating conversion price equal to 85% of the closing share price on the trading day immediately preceding the conversion date in lieu of the conversion price then in effect. A holder cannot convert more than $3.5 million of convertibles using this option on any one day.
The convertibles must be repaid in 26 twice-monthly installments beginning July 1.
Subject to some conditions, the company may make interest and amortization payments in stock at a price equal to the lesser of the conversion price and 82% of the volume-weighted average price of its stock on each of the five trading days immediately preceding the conversion date or interest payment date.
There is a change-of-control put option at the greater of par and the value of the convertibles on an as-converted basis.
The investors will also receive warrants to purchase a number of shares equal to 30% of the shares underlying the convertibles. The strike price is $1.29 per share, which is a 25% premium over the company's May 11 closing share price.
The warrants will be exercisable for five years beginning six months after settlement.
The placement is expected to settle Friday.
Under the purchase agreement, the company agreed to some restrictions on its ability to issue any securities until May 11, 2013 and not to enter into a variable-rate transaction at any time while the convertibles are outstanding.
A123 Systems makes lithium-ion batteries and energy storage systems and is based in Waltham, Mass.
| Issuer: | A123 Systems, Inc.
|
| Issue: | Senior convertible notes
|
| Amount: | $50 million
|
| Maturity: | July 2013
|
| Coupon: | 6%
|
| Price: | Par
|
| Conversion premium: | 15%
|
| Conversion price: | $1.18
|
| Conversion ratio: | 847.4576
|
| Put option: | Upon a change of control at greater of par and value of convertibles on as-converted basis
|
| Warrants: | For number of shares equal to 30% of shares underlying notes
|
| Warrant expiration: | Exercisable for five years beginning six months after settlement
|
| Warrant strike price: | $1.29
|
| Agent: | Non-brokered
|
| Pricing date: | May 11
|
| Settlement date: | May 18
|
| Stock symbol: | Nasdaq: AONE
|
| Stock price: | $0.96 at close May 15
|
| Market capitalization: | $141.02 million
|
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