By Susanna Moon
Chicago, July 18 - Netlist, Inc. entered into a loan and security agreement Thursday with DBD Credit Funding, LLC and an affiliate of Fortress Investment Group LLC for up to $10 million of term loans and up to $5 million of revolving loans, according to an 8-K filing with the Securities and Exchange Commission.
Interest on the loans is 11%. During the first 18 months after closing, the payments on the term loans are interest-only at a cash rate of 7% per year and a payment-in-kind interest rate of 4%, with the PIK interest capitalized semiannually beginning Dec. 31.
After the 18-month interest-only period, the term loans are amortized with 65% of the principal amount due in equal monthly installments over the following 18 months with a balloon payment equal to 35% of the remaining principal amount of the term loans plus accrued interest payable on July 18, 2016.
The company obtained an initial $6 million term loan tranche, which was fully drawn at closing on July 18, with a second $4 million tranche available upon achievement of certain performance milestones relating to intellectual property matters, the filing noted.
The $5 million of revolving loans are available at the lender's discretion.
Proceeds from the term loan were used to help repay the company's existing consolidated term loan with Silicon Valley Bank. The remainder will be used to fund working capital.
The company's obligations under the loan agreement are secured by a first-priority security interest in the company's intellectual property assets and a second-priority security interest in substantially all of the company's other assets.
Warrants issued
Concurrently with the loan agreement, the company issued to an affiliate of the lender seven-year warrants to purchase an aggregate of 1,648,351 shares of the company's common stock at a per share price of $1.00, of which 989,011 shares are exercisable immediately on a cash or cashless basis in whole or in part.
After that, 329,670 shares will become exercisable upon the achievement of the intellectual property monetization milestones, and the remaining 329,670 shares will become exercisable upon the company's receipt of an intellectual property milestone term loan. The warrants were issued in a private placement.
The warrant strike price is a 0.99% discount to the company's closing price on July 16.
Irvine, Calif.-based Netlist designs, manufactures and sells memory subsystems primarily for the server, high-performance computing and communications markets.
| Issuer: | Netlist, Inc.
|
| Issue: | Term loans, revolver
|
| Amount: | $10 million
|
| Maturity: | July 18, 2016
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| Coupon: | 11%; for first 18 months, 7% cash and 4% PIK
|
| Warrants: | For 1,648,351 shares
|
| Warrant strike price: | $1.00
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| Pricing date: | July 17
|
| Settlement date: | July 19
|
| Stock symbol: | Nasdaq: NLST
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| Stock price: | $1.01 at close July 16
|
| Market capitalization: | $34.67 million
|
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