Cash Systems amends convertible notes, now in principal of $22 million

By Laura Lutz

Des Moines, Aug. 21 - Cash Systems, Inc. amended and restated its senior secured convertible notes that were originally issued on Oct. 10, 2006, according to an 8-K filed with the Securities and Exchange Commission on Tuesday.

The amendments avoided a potential default that was announced in an 8-K filed on Aug. 9.

Under an agreement with each of the noteholders, the principal amount of the notes was increased to $22 million from $20 million and the interest rate was increased to 7.5% per year from 6.5% per year.

The holders were also given an additional put option under which holders may require redemption of a portion of the notes on Oct. 10, 2008, subject to a maximum redemption amount. For each holder, the maximum redemption amount will equal $8 million times the fraction of the then-outstanding notes held by that investor.

Also on Oct. 10, 2008, Cash Systems will have the right to call a portion of the notes for 130% of par. The company's call right is subject to the same maximum redemption amount for each holder.

The warrants that were issued with the notes were also amended. The total number of shares underlying the warrants was increased to 487,500 from 312,500, and the exercise price was reduced to $7.38 from $8.00 per share.

As previously reported, Cash Systems received a waiver of a default under the notes on Aug. 8. Under that agreement, noteholders agreed to waive a default arising from the company's failure to meet quarterly financial thresholds on consolidated EBITDA until Aug. 20.

As intended, that waiver gave the company enough time to negotiate the amendments that were announced on Tuesday.

If the company and the noteholders had not reached an amendment agreement by Aug. 20, the company would have been in default on the notes, according to the 8-K filing from Aug. 9.

In addition, Cash Systems said in the filing that if it were unable to secure alternative financing or raise additional capital to repay the outstanding balance on the notes at maturity, the noteholders would be entitled to foreclose on substantially all of the company's assets.

Based in Burnsville, Minn., Cash Systems provides automated teller machines.

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