DSL.net amends secured debt financing agreements to extend maturity in exchange for stock

By Caroline Salls

Pittsburgh, June 6 - DSL.net, Inc. entered into amendments to its secured debt financing agreements with DunKnight Telecom Partners LLC and DunKnight co-investor Knight Vision Foundation, as well as Laurus Master Fund, Ltd., according to an 8-K filing with the Securities and Exchange Commission.

The amendments include a three-month extension of the maturity date of the company's secured debt instruments in exchange for the issuance by the company to the senior lenders of 4.5 million shares of common stock.

DunKnight and the company extended the maturity date of DSL.net's outstanding 18% secured debentures to Dec. 4 from Sept. 4 in exchange for 3.71 million common shares issued to DunKnight and 187,500 shares to Knight Vision Foundation.

Under the Laurus amendment, the company issued an amended and restated secured convertible minimum borrowing note and an amended and restated secured revolving note.

The terms of the company's original promissory notes outstanding to Laurus were amended to extend the maturity to Nov. 1 from Aug. 1 and modify the interest rate provisions to a 7% fixed rate from June 2 through Aug. 1, and 10% thereafter until maturity.

Under the terms of the original promissory notes, the interest rate was based upon a formula and was capped at no more than 7%.

In consideration for Laurus' entering into the amendment, the company issued 1.5 million common shares to Laurus.

In addition, Laurus waived any economic anti-dilution rights to which it would otherwise be entitled as a result of the share issuance.

The senior lenders have agreed to "lock up" restrictions, which prohibit them, except upon event of default, from selling any of the shares for one year from June 2.

The company also granted the senior lenders "piggyback" registration rights on the shares.

On May 17, DSL.net's board of directors decided to fully accelerate, effective as of the closing date of the debt extensions with the senior lenders, the vesting of all unvested common stock options granted under its qualified stock option plans.

According to the filing, the decision was made to ease the company's accounting burden in recognition of the fact that the overwhelming majority of the outstanding stock options are at exercise prices well above the highest reported market price of the common stock over the past several fiscal quarters.

In the case of the acceleration of any unvested options held by any director or executive officer of the company, individuals must sign an agreement to refrain from selling, transferring, pledging or otherwise disposing of any shares acquired upon the accelerated exercise of options until the earliest of the date the exercise would have been permitted under the accelerated options' pre-acceleration vesting terms; the day after the executive officer's last day of employment with the company, the occurrence of a change in control of the company; and one year from the effective date.

DSL.net is a New Haven, Conn., provider of broadband communications services to businesses.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.