By Sheri Kasprzak
New York, July 13 - North American Technologies Group, Inc. has raised $5 million in a private placement of convertible debentures.
The debentures were sold to Sponsor Investments, LLC; Toibb Investment LLC; Michael Toibb; Scott and Cheryl Hergott Living Trust; Crestview Capital Master, LLC; Midsummer Investment Ltd.; and Islandia, LP.
The debentures bear interest at 7% annually, mature July 7, 2006 and are convertible into common shares at $0.22 each.
The investors also received warrants for up to 5,554,438 shares, exercisable at $0.24 each for three years.
The debentures were issued in response to a default on a $15 million construction loan. The company refinanced the loan as well.
North American subsidiary TieTek LLC failed to make principal and interest payments totaling $757,944, due on April 1 to Opus 5949 LLC.
Opus has agreed to waive the default and North American issued 4,541,822 shares in payment of the principal owned on the note due in April.
TieTek issued an amended and restated note to Opus for $14 million. The new note bears interest at 7% annually, as long as the debentures are outstanding. On July 7, 2006, when the debentures are due, the new note will begin bearing interest at Prime plus 700 basis points.
So far, Opus has received $2 million in funds from the debentures. The remaining $3 million will be held in a custodial account until North American needs it.
North American will not pay any interest or principal on the debenture while the construction loan is still outstanding.
Based in Houston, North American is a holding company for subsidiaries that make railroad crossties.
| Issuer: | North American Technologies, Inc.
|
| Issue: | Convertible debentures
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| Amount: | $5 million
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| Maturity: | July 7, 2006
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| Coupon: | 7%
|
| Price: | Par
|
| Yield: | 7%
|
| Conversion price: | $0.22
|
| Warrants: | For up to 5,554,438 shares
|
| Warrant expiration: | Three years
|
| Warrant strike price: | $0.24
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| Investors: | Sponsor Investments, LLC; Toibb Investment LLC; Michael Toibb; Scott and Cheryl Hergott Living Trust; Crestview Capital Master, LLC; Midsummer Investment Ltd. and Islandia, LP
|
| Settlement date: | July 7
|
| Stock price: | $0.19 at close July 7
|
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