By Laura Lutz
Des Moines, Dec. 18 - Reclamation Consulting and Applications, Inc. arranged a $5 million private placement of a secured convertible debenture with Pala Investments Holdings Ltd., according to an 8-K filing with the Securities and Exchange Commission.
Reclamation received $3 million of the proceeds upon closing on Dec. 12. It will be entitled to receive the remaining $2 million if it meets certain performance benchmarks by Dec. 31, 2008. If the company does not meet the benchmarks, Pala may choose to provide the $2 million anyway.
The debenture matures on Dec. 11, 2010 and bears interest at 12% per year, compounded quarterly.
Reclamation is required to conduct a one-for-two reverse split of its common stock and to increase its authorized shares to 200 million from 150 million. The company must use its best efforts to complete the share reorganization by Feb. 10, and it must be completed by April 10.
Beginning on the effective date of the share reorganization, the debenture will be convertible into common stock at $0.14 per share.
For each dollar advanced in the placement, Pala will receive a warrant for one share exercisable at $0.21 until Dec. 11, 2010. That strike price will be adjusted to $0.42 after the share reorganization.
The benchmarks for the second tranche are:
• The sale of at least 1 million gallons of Reclamation's Alderox product during 2008;
• Signed orders or contracts for the sale of at least 1 million gallons of Alderox during 2009 or a reasonable expectation of selling at least 1 million gallons during 2009 based on existing customer accounts and signed orders; and
• A gross profit margin of $5.00 per gallon on total sale of Alderox in 2008.
About $2 million of the proceeds will be used to repay debt. The rest will be used for working capital and repayment of other debt as it becomes due.
Reclamation is an industrial supply company based in San Clemente, Calif.
| Issuer: | Reclamation Consulting and Applications, Inc.
|
| Issue: | Secured convertible debenture
|
| Amount: | $5 million
|
| Maturity: | Dec. 11, 2010
|
| Coupon: | 12%
|
| Price: | Par
|
| Yield: | 12%
|
| Conversion price: | $0.14 (post-split)
|
| Warrants: | For one share per dollar invested
|
| Warrant expiration: | Dec. 11, 2010
|
| Warrant strike price: | $0.21 (pre-split); $0.42 (post-split)
|
| Investor: | Pala Investments Holdings Ltd.
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| Pricing date: | Dec. 12
|
| Settlement date: | Dec. 12 (for $3 million)
|
| Stock symbol: | OTCBB: RCAAE
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| Stock price: | $0.12 at close Oct. 17 (last trade)
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