Note is convertible into units of one share and a half-share warrant
By Devika Patel
Knoxville, Tenn., May 20 – Abakan Inc. issued a $2.92 million 5% senior convertible promissory note to Sonoro Invest SA as part of a settlement agreement on May 19, according to an 8-K filed Wednesday with the Securities and Exchange Commission.
The note is due Feb. 29, 2016 and may be converted into units of one common share and a half-share warrant at $1.00 per unit, a 138.1% premium to the May 18 closing share price of $0.42.
If Abakan prepays the note before July 31, 2015, it may pay off the note for $2.7 million, plus interest, without any penalty.
The warrant is exercisable at $1.50, a 257.14% premium to the May 18 closing share price.
The note was issued to the investor in connection with a dispute that arose concerning $2.11 million of convertible promissory notes and a promissory note. Sonoro filed a lawsuit against Abakan vis-à-vis this dispute in the United States District Court for the Southern District of Florida on Oct. 1, 2014. The suit alleged defaults on the disputed notes. The May 19 settlement agreement also stipulates that if Abakan fails to pay off the note by maturity, Sonoro may file a mutually executed Stipulated Consent Award with JAMS.
The Miami company develops, manufactures and markets advanced nanocomposite materials, innovative fabricated metal products, and engineered metal composites for applications in oil and gas, petrochemical, mining, aerospace and defense, energy, infrastructure and processing industries.
| Issuer: | Abakan Inc.
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| Issue: | Senior convertible promissory note, convertible into units of one common share and a half-share warrant
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| Amount: | $2,915,000
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| Maturity: | Feb. 29, 2016
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| Coupon: | 5%
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| Conversion price: | $1.00
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| Call: | Without penalty until July 31, 2015, with a $2.7 million payoff amount, plus interest
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| Warrants: | One half-share warrant per unit upon conversion
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| Warrant strike price: | $1.50
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| Investor: | Sonoro Invest SA
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| Settlement date: | May 19
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| Stock symbol: | NYSE: ABKI
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| Stock price: | $0.42 at close May 18
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| Market capitalization: | $39.75 million
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