Shareholder provides guarantee of loans, receives warrants too
By Angela McDaniels
Tacoma, Wash., Feb. 25 - Lighting Science Group Corp. entered into $53 million of term loans on Feb. 19 and issued a warrant to each of Medley Capital Corp. and Medley Opportunity Fund II LP.
Each 10-year warrant is exercisable for 5 million shares at an exercise price of $0.95 per share, according to a company news release.
The exercise price is a 140.5% premium to the company's $0.395 closing share price on Feb. 18.
Term loans
The company entered into a $30.5 million five-year term loan and a $22.5 million two-year delayed draw term loan.
Medley Capital is the administrative agent.
The interest rate is Libor plus 1,200 basis points for the five-year term loan. Up to 200 bps of interest may be paid in kind.
The delayed-draw term loan may be borrowed and reborrowed on a revolving basis through June. After June, it may be drawn by the company from time to time, provided that such drawdowns may not be reborrowed once repaid.
Borrowings under the delayed-draw term loan are limited by a borrowing base equal to the sum of (i) 85% of eligible accounts, (ii) 60% of inventory and (iii) qualified cash, less any reserves imposed by Medley.
Each draw on the delayed-draw term loan made by the company is subject to a $2 million liquidity requirement and the payment of a funding fee.
Through June, the delayed-draw term loan bears interest at Libor plus 1,050 bps, payable in cash monthly in arrears. After June, the interest rate will be the same as the five-year term loan.
Outstanding loans are voluntarily prepayable from time to time, subject to certain prepayment premiums.
The term loans are secured by substantially all of the assets of the company and the company's material wholly owned subsidiaries and may be used for working capital requirements and other general corporate purposes.
The company may replace the delayed-draw term loan facility with a replacement revolving facility, on a secured first-priority basis, without penalty or premium.
Proceeds were used to repay the company's credit facility dated Nov. 22, 2010 with Wells Fargo Bank, NA and the second-lien credit facility dated Sept. 20, 2011 with Ares Capital Corp., which were both terminated.
Guarantee
Pegasus Capital Partners IV, LP and Pegasus Capital Partners V, LP agreed to guarantee the loans.
In return, each received a 10-year warrant to purchase 5 million shares of common stock at an exercise price of $0.50 per share.
The exercise price is a 26.6% premium to the company's $0.395 closing share price on Feb. 18.
The Pegasus guarantors are affiliates of Pegasus Capital Advisors, LP, which, together with its affiliates, was the beneficial owner of 86.8% of the company's common stock as of Feb. 19 after giving effect to the transactions.
Lighting Science is a Satellite Beach, Fla.-based company that makes lighting devices and systems that use light-emitting diodes as the light source.
| Issuer: | Lighting Science Group Corp.
|
| Issue: | Term loans, warrants
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| Amount: | $53 million
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| Warrants: | For 10 million shares
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| Warrant expiration: | Feb. 19, 2024
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| Warrant strike price: | $0.95
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| Warrant recipients: | Medley Capital Corp. and Medley Opportunity Fund II LP
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| Settlement date: | Feb. 19
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| Stock symbol: | OTCBB: LSCG
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| Stock price: | $0.395 at close Feb. 18
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| Market capitalization: | $81.18 million
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|
|
| Term loan
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| Amount: | $30.5 million
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| Maturity: | Feb. 19, 2019
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| Coupon: | Libor plus 1,200 bps, 200 bps of which is payable in kind
|
|
|
| Delayed-draw term loan
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| Amount: | $22.5 million
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| Maturity: | Feb. 19, 2016
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| Coupon: | Libor plus 1,050 bps through June, then Libor plus 1,200 bps, 200 bps of which is payable in kind
|
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