Convertibles issued at 25% discount; proceeds will total $3.75 million
By Angela McDaniels
Tacoma, Wash., May 11 - Four Rivers BioEnergy Inc. agreed to sell $5 million principal amount of two-year senior secured convertible debentures to GCP VIII, LLC at a 25% discount, according to an 8-K filing with the Securities and Exchange Commission.
The investor bought $2.13 million principal amount of the convertibles on May 5 for $1.6 million and received a five-year warrant for 730,689 shares of common stock.
Once some conditions are satisfied, the investor will purchase $2.87 million principal amount of the convertibles for $2.15 million. It will receive a five-year warrant for 981,863 shares.
The exercise price of both warrants is $0.40 per share. This is a 95.12% premium over the company's $0.205 closing share price on May 4.
The notes are convertible into common stock at any time. The conversion price will be the lesser of $3.00 and 80% of the average volume-weighted average price of the company's shares for the 30 consecutive trading days ending on the trading day immediately prior to conversion, subject to a floor of $1.50.
The convertibles are callable at any time. At maturity or upon redemption, the investor will receive 118% of par.
The convertible do not pay interest.
Without the consent of holders of at least two-thirds of the convertibles, the company is prohibited from entering into any other debt, granting any liens or security over any asset, repaying any other debt, repurchasing common stock or paying a dividend, among other things.
In connection with the transaction, subsidiary Four Rivers BioEnergy Co., Inc. repaid in full a $440,000 promissory note that was secured by a lien over a land plot in Kentucky, which is now pledged as security for the convertibles. Proceeds from the first tranche of convertibles were used to fund the repayment.
Four Rivers is a development-stage company based in London focused on building a network of bio-energy plants in the United States and the United Kingdom.
| Issuer: | Four Rivers BioEnergy Inc.
|
| Issue: | Original issue discount senior secured convertible debentures
|
| Principal amount: | $5 million
|
| Proceeds: | $3.75 million
|
| Maturity: | Two years
|
| Coupon: | 0%
|
| Price: | 75% of par
|
| Conversion price: | Lesser of $3.00 and 80% of average VWAP for the 30 days ending on the day immediately prior to conversion, subject to floor of $1.50
|
| Call option: | At any time at 118% of par
|
| Warrants: | For 730,689 shares
|
| Warrant strike price: | $0.40
|
| Warrant expiration: | Five years
|
| Agent: | Non-brokered
|
| Investor: | GCP VII, LLC
|
| Settlement date: | May 5 (for $2,133,333)
|
| Stock symbol: | $0.18 at close May 10
|
| Stock price: | Pink Sheets: FRBE
|
| Market capitalization: | $1.5 million
|
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