By Laura Lutz
Des Moines, Nov. 26 - Network CN Inc. and Shanghai Quo Advertising Co. Ltd., a subsidiary, arranged a $50 million private placement of convertible notes and warrants, according to an 8-K filing with the Securities and Exchange Commission.
The senior secured convertible notes will mature on June 30, 2011 and bear interest at 3% per year. They will be convertible into common stock at $1.65 per share.
Affiliated investment funds of Och-Ziff Capital Management Group will buy the notes, along with warrants for 34,285,715 shares, in three tranches:
• The first tranche will include $6 million of notes, warrants for 2.4 million shares exercisable at $2.50 and warrants for 1,714,285 shares exercisable at $3.50.
• The second tranche will include $9 million of notes, warrants for 3.6 million shares exercisable at $2.50 and warrants for 2,571,430 shares exercisable at $3.50.
• The third tranche will include $35 million of notes, warrants for 14 million shares exercisable at $2.50 and warrants for 10 million shares exercisable at $3.50.
All of the warrants will be exercisable until June 30, 2011.
If Network CN fails to meet annual earnings-per-share targets, the conversion price and warrant strike prices will be lowered.
Proceeds will be used for the company's planned expansion of its operations.
Network CN is a Chinese media and travel-network company with headquarters in New York.
| Issuer: | Network CN Inc.
|
| Issue: | Senior secured convertible notes
|
| Amount: | $50 million
|
| Maturity: | June 30, 2011
|
| Coupon: | 3%
|
| Price: | Par
|
| Yield: | 3%
|
| Conversion price: | $1.65
|
| Warrants: | For 34,285,715 shares
|
| Warrant expiration: | June 30, 2011
|
| Warrant strike price: | $2.50 for 20 million shares; $3.50 for 14,285,715 shares
|
| Investors: | Affiliates of Och-Ziff Capital Management Group
|
| Pricing date: | Nov. 19
|
| Stock symbol: | OTCBB: NWCN
|
| Stock price: | $2.90 at close Nov. 23
|
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