Convertibles sold at 5% discount to par; investor receives warrants
By Angela McDaniels
Tacoma, Wash., March 4 – Electronic Cigarettes International Group, Ltd. agreed to sell $3,157,895 principal amount of 12% convertible promissory notes and 28,456,257 warrants to an investor for $3 million.
The convertibles were sold at a 5% discount under a Feb. 26 securities purchase agreement.
The convertibles mature four months from the date of issuance.
Interest is payable in cash or stock on the maturity date.
The notes are convertible into common stock at any time at a conversion price of $0.05 per share, which is a 55% discount to the company’s $0.11 closing share price on Feb. 25.
The convertibles may be prepaid in whole or in part at any time at par.
The warrants are exercisable for an aggregate of 28,456,257 shares. If the company repays the convertibles in full within three months of the original issue date, the number of warrant shares will automatically be reduced by 50%.
The warrants are exercisable for five years, and the exercise price is $0.03 per share, which is a 73% discount to the company’s $0.11 closing share price on Feb. 25.
For one year, the investor will have the right to participate in subsequent financings – excluding any issuance through a public underwritten offering or to an investor or a group of investors that already own common stock or any securities that entitle the holder to acquire common stock – in an amount up to 100% of the investors subscription amount in the convertibles on the same terms, conditions and price provided for in such subsequent financing.
The Grand Rapids, Mich., company markets and sells electronic cigarettes.
| Issuer: | Electronic Cigarettes International Group, Ltd.
|
| Issue: | Original issue discount convertible promissory notes
|
| Amount: | $3,157,895
|
| Price: | 95
|
| Proceeds: | $3 million
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| Maturity: | Four months
|
| Coupon: | 12%
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| Conversion price: | $0.05
|
| Call option: | At any time at par
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| Warrants: | 28,456,257
|
| Warrant expiration: | Five years
|
| Warrant strike price: | $0.03
|
| Settlement date: | Feb. 4
|
| Stock symbol: | OTCBB: ECIG
|
| Stock price: | $0.163 at close March 4
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