RiceBran Technologies has entered into definitive agreements with a group of accredited investors for the purchase of US$6 million of non-convertible original issue discount debentures and US$2 million of convertible preferred stock.
The company intends to use net proceeds from the offering to repay approximately US$4.2 million in debt, including the repayment of all of its outstanding debt with Great Elm Capital (formerly Full Circle Capital).
The remaining proceeds, net of expenses, will be used as working capital to fuel the growth of the company’s rice bran ingredient business in both the food-grade and animal nutrition markets, as well as to begin the implementation of its business realignment to improve overall operating efficiencies.
The US$8 million offering includes a combination of debt and equity securities, and would close on February 10, 2017, subject to customary closing conditions.
The debt component of the offering consists of US$6 million in non-interest bearing non-convertible original issue discount senior secured debt maturing on February 10, 2019 and warrants to purchase 6,875,000 shares of Common Stock at a fixed exercise price of US$0.96 per share.
The face value of this original issue discount senior secured debt is $6.6 million, reflecting an aggregate original issue discount of US$600,000.
The $4.2 million in debt repayments includes approximately US$4.0 million for the retirement of all of its outstanding debt with Great Elm Capital.
The company also reached an agreement with the holders of approximately US$6.3 million of the company’s current subordinated debt to:
– Extend the maturity of the debt for an additional year to May 10, 2019,
– Reduce the annual interest rate from 11.75% to 7% in exchange for new warrants to purchase a total of 3,484,675 shares of Common Stock at an exercise price of US$0.96 per share,
– The amendment of existing warrants to purchase 289,669 shares to reduce the exercise price from US$5.25 per share to US$0.96 per share, and
– The payment of approximately US$230,000 in principal and approximately US$270,000 in accrued interest.
The Offering, debt repayment, and subordinated debt restructuring will result in an annual cash interest savings on the subordinated debt of approximately US$325,000.