Towerstream amends series D convertible preferreds, exchanges half

By Susanna Moon

Chicago, Jan. 3 – Towerstream Corp. canceled 50% of its series D convertible preferred stock last Friday under an exchange agreement, according to an 8-K filing with the Securities and Exchange Commission.

Towerstream amended the terms of the series D convertible preferreds to reduce the liquidation preference in the event of a fundamental transaction, liquidation, dissolution or wind-up of the company to 100% of the aggregate stated value of $2,466,000 of the securities, from 200%.

Also on Dec. 30, the company then exchanged 1,233 shares of the series D convertible preferreds, or 50% of the outstanding shares for 1,233 newly issued shares of series F convertible preferred stock with an aggregate stated value of $1,233,000.

The terms of the series F preferreds are substantially similar to those of the amended series D preferreds, except that they are convertible into common stock at a price per common share equal to 90% of the volume-weighted average price of the common stock during the five trading days prior to conversion with a conversion floor of $0.20 per common share, the filing noted.

Specifically, the company amended the terms of the series D preferreds to cancel 50% of shares outstanding and to eliminate a 200% liquidation preference. After the amendment, holders will receive 100%, versus 200%, of the amount invested upon the occurrence of a fundamental transaction.

Before the amendment, the series D preferreds had provided for a conversion price equal to 75% of the closing price on the day immediately preceding conversion.

The terms of the exchange and series F preferreds were determined by arms-length negotiation.

Towerstream provides broadband services based in Middletown, R.I.

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