By Angela McDaniels
Tacoma, Wash., Aug. 21 - China Security & Surveillance Technology, Inc. and Citadel Equity Fund Ltd. have agreed to restructure the $60 million of 1% guaranteed senior unsecured convertible notes due 2012 and $50 million of 1% guaranteed senior unsecured convertible notes due 2012 the company issued to Citadel in a 2007 private placement, according to an 8-K filing with the Securities and Exchange Commission.
The parties signed a term sheet for the restructuring in late July, and the final agreement was reached on Tuesday.
The notes will be restructured into two new tranches: $50 million of tranche A zero-coupon guaranteed senior unsecured convertible notes and $84 million of tranche B zero-coupon guaranteed senior unsecured notes.
Both the tranche A and tranche B notes will mature three years after the closing date and be repaid in six consecutive semiannual installments starting six months after the closing date.
The conversion price for the tranche A notes will be $10.00 per share initially, subject to a one-time price reset on the date that is 18 months following the closing date based on the volume-weighted average price of the company's shares during the 45 trading days immediately preceding the reset date, provided that the conversion price will be adjusted to no lower than $6.00 per share.
The company can call the new notes at anytime at par.
The new notes will be guaranteed by the company's significant subsidiaries and will be subject to covenants restricting additional debt, liens and certain payments and transactions with affiliates.
China Security will also pay $5 million in cash and issue 2,902,758 shares of its common stock to Citadel as an inducement to restructure the notes.
The transactions will close on Aug. 31.
Under the terms of the existing notes, if they had not been converted, they would have been repaid at maturity at par plus interest and an additional 15% per year, calculated on a quarterly compounded basis.
Located in Shenzhen, China, China Security provides security and surveillance products and services.
| Issuer: | China Security & Surveillance Technology, Inc.
|
| Issue: | Notes
|
| Amount: | $134 million
|
| Warrants: | No
|
| Investor: | Citadel Equity Fund Ltd.
|
| Pricing date: | Aug. 18
|
| Settlement date: | Aug. 31
|
| Stock symbol: | NYSE: CSR
|
| Stock price: | $7.28 at close Aug. 18
|
| Market capitalization: | $368.02 million
|
|
|
| Tranche A
|
| Issue: | Guaranteed senior unsecured convertible notes
|
| Amount: | $50 million
|
| Maturity: | 2012
|
| Coupon: | 0%
|
| Price: | Par
|
| Conversion price: | Initially $10.00 per share
|
| Call option: | At par at any time
|
|
|
| Tranche B
|
| Issue: | Guaranteed senior unsecured notes
|
| Amount: | $84 million
|
| Maturity: | 2012
|
| Coupon: | 0%
|
| Price: | Par
|
| Call option: | At par at any time
|
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