By Laura Lutz
Des Moines, Dec. 13 - First Montauk Financial Corp. obtained a $2 million convertible secured note facility from AEFC-FMFK Investment Corp., according to an 8-K filing with the Securities and Exchange Commission.
First Montauk immediately drew down $1 million under the facility. The company may require AEFC to invest an additional $1 million beginning on Feb. 1, 2008.
The notes mature on Dec. 31, 2008 and bear interest at 10% per year. They will be convertible into common stock at $0.35 per share, beginning on July 1, 2008.
Interest will be payable monthly.
First Montauk may prepay the note at any time before July 1, 2008, subject to an escalating prepayment penalty. If it prepays the note, First Montauk will issue a warrant with a strike price of $0.35 per share.
If First Montauk does not draw down the full $2 million and the note has not been prepaid by July 1, 2008, the company will issue a warrant exercisable for one share for each dollar available but not drawn down under the agreement. That warrant will also have a strike price of $0.35 per share.
First Montauk is a securities broker-dealer based in Red Bank, N.J.
| Issuer: | First Montauk Financial Corp.
|
| Issue: | Convertible secured note facility
|
| Amount: | $2 million
|
| Maturity: | Dec. 31, 2008
|
| Coupon: | 10%
|
| Price: | Par
|
| Yield: | 10%
|
| Conversion price: | $0.35
|
| Warrants: | If note is not repaid and full amount is not drawn down by July 1, 2008, warrant for one share for each dollar available but not drawn down; warrants also issuable upon prepayment
|
| Warrant strike price: | $0.35
|
| Investor: | AEFC-FMFK Investment Corp.
|
| Settlement date: | Dec. 7 (for $1 million)
|
| Stock symbol: | OTCBB: FMFK
|
| Stock price: | $0.28 at close Dec. 7
|
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