Prospect Global swaps $5.5 million of notes for 5.5 million preferreds

Preferreds convert to units of a share, two warrants at $0.12 per unit

By Devika Patel

Knoxville, Tenn., July 10 - Prospect Global Resources Inc. exchanged $5.5 million of subordinated promissory notes for 5.5 million senior mandatorily convertible preferred shares on July 10, according to an 8-K filed Wednesday with the Securities and Exchange Commission. The notes were held by Very Hungry LLC and Scott Reiman 1991 Trust.

The preferred stock will begin to accrue dividends of 20% starting on Dec. 15, increasing to 25% on June 15, 2014 and again to 30% on Dec. 31, 2014.

The preferred stock will convert into units of one common share and two warrants at a conversion price of $0.12 per unit. The units are identical to those being sold in the company's public offering, which priced on June 21.

Of the warrants, one is exercisable at $0.12 for five years and the other for 90 days at $0.12. The strike price is a 57.14% discount to the June 20 closing share price of $0.28.

Based in Denver, Prospect Global is a resource exploration company.

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