By Lisa Kerner
Charlotte, N.C., Dec. 7 – LSB Industries, Inc. sold $210 million of preferred stock and warrants in a private placement to an affiliate of Security Benefit Corp.
Proceeds will be used to complete construction of an ammonia plant, nitric acid plant and nitric acid concentrator at LSB’s chemical facility located in El Dorado, Ark.
The series E cumulative redeemable class C preferred stock has a 14% annual dividend rate and an economic participation right equal to 2% of the outstanding common stock before the transaction was completed.
LSB may redeem the stock at any time without premium or penalty at the liquidation preference plus accrued dividends plus the value of the participating right, according to a news release.
Security Benefit will have the option to redeem the stock beginning one day after the maturity date of LSB’s existing senior secured notes.
Security Benefit has received warrants to purchase 17.99% of the outstanding common stock with an exercise price of $0.10 per warrant and a 10-year term.
Also, LSB has issued a share of preferred stock under a separate series to Security Benefit with voting rights equal to 19.99% of the outstanding common stock before the transaction.
The total cost to complete the El Dorado expansion projects is in the range of $831 million to $855 million.
“These projects remain on schedule, with the nitric acid plant in operation and producing, and the ammonia plant anticipated to enter service in the second quarter of 2016,” said interim chief executive officer Daniel Greenwell.
In connection with the private placement agreement, LSB has appointed three new members and two board members resigned, increasing the size of the board to 14 directors, from 13.
LSB is a manufacturing, marketing and engineering company based in Oklahoma City.
| Issuer: | LSB Industries, Inc.
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| Issue: | Series E cumulative redeemable class C preferred stock
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| Amount: | $210 million
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| Dividend: | 14%
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| Warrants: | Yes
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| Exercise price: | $0.10 per warrant
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| Distribution: | Private placement
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| Purchaser: | An affiliate of Security Benefit Corp.
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