New York, May 25 - NHC Communications Inc. said it has agreed to sell $2.5 million of secured convertible debentures to an investor.
The securities will pay interest at Prime rate plus 200 basis points, will mature in two years and will convert at the lower of C$0.55 per share, the volume-weighted average stock price for the 10 trading days before conversion and the price on the day before the transaction closes.
The principal will amortize monthly starting six months after closing. NHC can pay stock instead of cash if specified conditions are met.
In addition to the debentures, the investor will receive warrants for 50% of the shares to be issued on conversion. The warrants will run for five years and have a strike price of C$0.69.
NHC, a Montreal-based provider of automated main distribution frames and cross-connect equipment for copper-based telecommunications, will use proceeds for general corporate purposes.
The company will receive $1.5 million at closing and the remainder will be released from escrow once conditions are met, including receipt of an order for at least $5 million of equipment.
| Issuer: | NHC Communications Inc.
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| Issue: | Secured convertible debentures
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| Amount: | $2.5 million
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| Maturity: | Two years
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| Coupon: | Prime rate plus 200 basis points
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| Conversion price: | Lower of C$0.55, volume-weighted average stock price for 10 trading days before conversion, the price on day before transaction closes
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| Warrants: | For 50% of shares to be issued on conversion
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| Warrant strike price: | C$0.69
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| Warrant term: | 5 years
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| Announcement date: | May 25
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| Stock price: | C$0.55
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