Investor also has option to buy 16.7 million shares for $50.1 million
By Toni Weeks
San Diego, Oct. 26 - Prospect Global Resources Inc. said it arranged a $100 million private placement of 10% convertible springing second-lien notes with Apollo Management VII, LP on Oct. 25, according to an 8-K filed Friday with the Securities and Exchange Commission.
The investor also has the option to purchase 16.7 million shares of Prospect Global common stock at $3.00 per share for additional proceeds of $50.1 million.
The notes bear interest at 10%, of which 4% is payable in cash and 6% is payable in additional notes, and are initially convertible at $3.00 per share.
The conversion price is a 9.91% premium to the closing share price of $3.33 on Oct. 24. The price of the optional shares is also a 9.91% premium to that price.
The company said it expects the deal to close in the first half of 2013. Closing is contingent on completion of a bankable feasibility study for the Holbrook project that satisfies conditions contained in the preliminary economic assessment for the project and approval by shareholders.
Proceeds will be used to continue development of the company's proposed potash mining facility being developed in Holbrook, Ariz., by subsidiary American West Potash and for partial repayment of a promissory note issued to Karlsson Group.
Prospect Global also said in a separate press release that it is conducting a public offering of 30 million shares of common stock with a 30-day greenshoe for an additional 4.5 million shares via joint bookrunners Dahlman Rose & Co. LLC and Macquarie Capital (USA) Inc. Proceeds will be used to finance the bankable feasibility study and repayment of debt to Karlsson.
Denver-based Prospect Global explores and develops potash deposits.
| Issuer: | Prospect Global Resources Inc.
|
| Issue: | Convertible springing second-lien notes
|
| Amount: | $100 million
|
| Maturity: | Seven years
|
| Coupon: | 10%
|
| Conversion price: | $3.00
|
| Call: | Yes
|
| Warrants: | No
|
| Investor: | Apollo Management VII, LP
|
| Pricing date: | Oct. 25
|
| Stock symbol: | Nasdaq: PGRX
|
| Stock price: | $3.33 at close Oct. 24
|
| Market capitalization: | $162.48 million
|
|
|
| Optional shares
|
| Amount: | $50.1 million
|
| Shares: | 16.7 million
|
| Price: | $3.00
|
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