NXT Nutritionals revises convertible debentures, notes after placement

Maturities extended to Nov. 21, 2015; conversion price is now $0.25

By Devika Patel

Knoxville, Tenn., Dec. 14 - NXT Nutritionals Holdings Inc. said it restructured its long-term debt on Nov. 4 in connection with a recent $1 million private placement of notes and preferreds with NXT Investment Partners, LLC. The securities were sold in 2009 and 2010 private placements.

Over 90% of noteholders agreed to revise the maturity date of NXT's 2010 notes to Nov. 21, 2015. The company also no longer has to make payments until maturity, and the holders agreed to subordinate their interests to that of NXT Investment Partners. In exchange for this, the conversion price was lowered, along with the strike price of related warrants, to $0.25.

More than 70% of the investors who hold the company's 2009 convertible debentures agreed to extend the debt's maturity to Nov. 21, 2015. Their related warrants were also revised to have a $0.25 strike price and the conversion price was reduced to the same. The agreement amends only the 2009 debentures of the holders who signed the agreement.

"The debt restructuring is a positive development for the company," chief executive officer Mike McCarthy said in a press release, noting that the company intends to pursue growth aggressively with a primary focus on selling its products to the United States military.

As previously reported, the private placement with NXT Investment Partners priced for $1.5 million on Nov. 21. The investor purchased $1 million of 13% four-year senior secured promissory notes at pricing.

The notes were accompanied by 13,075,468 series A convertible preferred shares. The preferreds carry a dividend equal to the greater of 10% of the notes' outstanding principal or 10% of the company's net income above $500,000 for the fiscal year at the time of calculation. The preferreds are convertible into an equal number of common shares.

Settlement of the remaining $500,000 is expected by Jan. 20.

NXT Nutritionals is a Holyoke, Mass.-based developer and marketer of proprietary, patent-pending healthy alternative sweeteners, food and beverage products.

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