Tanke Biosciences defaults on 8% convertible notes, owes $7.67 million

Company releases $230,000 held in escrow to pay investors

By Devika Patel

Knoxville, Tenn., Feb. 13 - Tanke Biosciences Corp. is in default under its 8% senior convertible notes, according to an 8-K filed Wednesday with the Securities and Exchange Commission.

The notes were sold on Feb. 9, 2011 in a private placement of units, with each unit consisting of a $1.15 8% senior convertible note and a warrant, which was exercisable at $1.40 per share.

The default is the result of the company's failing to pay about $7.67 million in principal and accrued interest to the investors on Feb. 9. The company has agreed to release $230,000 held in escrow to the investors. Of that amount, $68,178 will be used to pay the accrued interest, and the balance shall be applied towards the principal.

As a result of the default, the notes have become immediately due. The company said it is in discussions with the investors to negotiate a repayment schedule.

The animal nutrition and feed additive provider is based in Guangzhou, China.

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