By Lisa Kerner and Devika Patel
Charlotte, N.C., Jan. 15 - Far East Energy Corp. announced an agreement to issue $60 million of 13% three-year senior secured notes in a private placement. Knight Capital Americas LLC is the advisory agent.
The transaction is expected to close and fund by Wednesday.
Interest on the notes is payable at 13% semiannually with an option to pay interest in kind at a rate of 14.5% per year.
In addition, investors will receive warrants exercisable at $0.085 for five years. The strike price reflects a 41.67% premium to the Jan. 14 closing share price of $0.06.
The notes will be senior secured obligations of Far East Energy (Bermuda), Ltd., a wholly owned subsidiary of Far East Energy.
Proceeds will be used for drilling and completion of wells in China's Shanxi Province and for general corporate purposes.
Far East will also use the proceeds to repay $4.13 million of principal outstanding under a $25.13 million credit facility with Standard Chartered Bank. Standard Chartered Bank elected to roll forward $21 million of the existing credit facility for an additional 12-month term from the date of closing.
The notes were offered exempt from registration under the Securities Act of 1933, as amended, and may not be offered and sold to U.S. persons absent registration or exemption.
Far East is a Houston-based natural gas company focused on coal-bed methane projects.
| Issuer: | Far East Energy Corp.
|
| Issue: | Senior secured notes
|
| Amount: | $60 million
|
| Maturity: | Three years
|
| Coupon: | 13% in cash or 14.5% in kind
|
| Warrants: | Yes
|
| Warrant expiration: | Five years
|
| Warrant strike price: | $0.085
|
| Advisory agent: | Knight Capital Americas LLC
|
| Pricing date: | Jan. 15
|
| Settlement date: | Jan. 16
|
| Stock symbol: | OTCBB: FEEC
|
| Stock price: | $0.06 at close Jan. 14
|
| Market capitalization: | $28.27 million
|
| Distribution: | Private placement
|
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