Environmental Power to sell $10 million to $25 million 13% five-year convertibles

By Rebecca Melvin

New York, Oct. 29 - Environmental Power Corp. launched an offering of $10 million to $25 million of five-year unsecured convertible notes with preliminary pricing of 13% for the coupon and a minimum initial conversion price of $5.40, according to a company source Wednesday.

The registered deal is being sold via Chicago-based Ziegler Capital Markets and may be increased to up to $50 million.

The notes, which will be sold in denominations of $10,000 and mature Jan. 1, 2014, will be non-callable for three years and then provisionally callable at 110% of the principal amount of the notes plus accrued interest.

After three years, the company may require holders to convert all the notes into common stock if there are only 20% of the notes left outstanding.

Marketing will be ongoing, probably through the end of the year, with once-a-month closings, a Ziegler source said.

Proceeds of the notes will be contributed by Environmental Power as equity to a subsidiary, Microgy Holdings, which has entered into bond project financings in Texas and California.

Tarrytown, N.Y.-based Environmental Power is a developer, owner and operator of biogas renewable energy projects.

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