Company will issue three types of warrants to lenders
By Marisa Wong
Madison, Wis., March 18 - KiOR, Inc. and its wholly owned subsidiary, Kior Columbus, LLC, amended their loan and security agreement dated Jan. 26, 2012 with 1538731 Alberta Ltd. as agent and lender, 1538716 Alberta Ltd. as lender and KFT Trust, Vinod Khosla as trustee.
Under the original loan agreement, the two Canadian corporations owned by pension-fund clients of Alberta Investment Management Corp. made a term loan in the principal amount of $50 million, and the Vinod Khosla affiliate made a term loan in the principal amount of $25 million, for a total of $75 million. According to an 8-K filed Monday with the Securities and Exchange Commission, the amendment, completed on March 17,
• Increases the amount available under the facility by $50 million, which KiOR may borrow from Khosla before March 31, 2014;
• Replaces the requirement to make installment payments of principal and interest with a single balloon payment at maturity;
• Allows the borrowers to elect payment of paid-in-kind interest throughout the term of the loan;
• Modifies certain financial and negative covenants, including a covenant that required the company to complete an equity offering meeting certain conditions on or before March 31;
• Requires the company to raise additional capital in the amount of $175 million on or before March 31, 2014 unless it demonstrates three months cash on hand;
• Increases by $25 million the limit on the amount of capital expenditures the borrowers can make on the first standard commercial production facility in Natchez, Miss., prior to raising additional funds; and
• Provides for the conversion of (a) the secured obligations and some other related amounts owed to certain of the lenders into the debt issued in connection with the company's financing of its Natchez facility and (b) the secured obligations and other related amounts owed to certain lenders into the equity securities issued in connection with the company's financing of the Natchez facility.
The filing noted that in order to borrow the additional amounts of up to $50 million from Khosla, the company must provide Khosla with a near-term cash flow forecast demonstrating the need for such borrowing, and at the time of advance there can be no event of default.
Also, the company may not have completed an offering of debt securities resulting in gross proceeds in an amount of $75 million or more. Any additional borrowings from Khosla are considered a part of the loan advance.
In connection with the amendment, the company agreed to pay the Alberta lenders $100,000 for costs and expenses.
The company will also issue warrants to the lenders for a total of 619,867 shares of its class A common stock (ATM warrants). The warrants will be exercisable at $5.71 per share.
In addition, on the first day of each subsequent 12-month period, the company will grant the lenders additional shares under their warrants equal to (i) 3.75% of the average principal balance of the loan advance payable as of the last calendar day of each of the subsequent 12 months, divided by (ii) 100% of the volume-weighted average price of the class A common stock over the 20 consecutive trading days ending on, but excluding, the day the shares are granted.
These warrants expire on Aug. 3, 2020.
The ATM warrants issued to Khosla will not be exercisable until the warrant issuance has been approved by KiOR shareholders, the filing noted.
Under the amended agreement, the company must also issue to Khosla warrants to purchase class A common shares in connection with each subsequent loan advance from Khosla (subsequent drawdown warrants). The number of class A common shares underlying the subsequent drawdown warrant is an amount equal to 18% of the amount of the loan advance divided by the average market price.
The subsequent drawdown warrants also expire on Aug. 3, 2020 and will not be exercisable until their issuance has been approved by KiOR stockholders.
According to the filing, the company must also issue to each lender one or more additional warrants to purchase class A shares if it elects payment of paid-in-kind interest on the outstanding principal balance of the loan advance for any month (PIK warrants). Any PIK warrants issued after the amendment are referred to as "subsequent PIK warrants."
The number of shares underlying the subsequent PIK warrants is an amount equal to 18% of the amount of PIK interest payable over the following 12 months divided by the average market price.
The subsequent PIK warrants expire on Aug. 3, 2020.
The company said it has elected to pay in-kind interest over the 12 months following April 1.
As a result, in connection with closing, the company issued the lenders subsequent PIK warrants to purchase a total of 478,626 shares of class A common stock at an exercise price of $5.71 per share.
Subsequent PIK warrants issued to Khosla will not be exercisable until approved by KiOR stockholders.
KiOR is a Pasadena, Texas-based development-stage, next-generation renewable fuels company.
| Issuer: | KiOR, Inc.
|
| Issue: | Term loan
|
| Amount: | $125 million (increased from $75 million)
|
| Lenders: | 1538716 Alberta Ltd., 1538731 Alberta Ltd. as agent and KFT Trust, Vinod Khosla as trustee
|
| Original closing date: | Jan. 26, 2012
|
| Amendment date: | March 17
|
| Stock Symbol: | Nasdaq: KIOR
|
| Stock price: | $5.81 at close March 15
|
| Market capitalization: | $660.75 million
|
|
|
| ATM warrants
|
| Warrants: | For 619,867 shares of its class A common stock
|
| Warrant expiration: | Aug. 3, 2020
|
| Warrant strike price: | $5.71
|
|
|
| Subsequent drawdown warrants
|
| Warrants: | For number of class A common shares equal to 18% of amount of loan advance divided by average market price
|
| Warrant expiration: | Aug. 3, 2020
|
|
|
| Subsequent PIK warrants
|
| Warrants: | For 478,626 shares of class A common stock
|
| Warrant expiration: | Aug. 3, 2020
|
| Warrant strike price: | $5.71
|
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