Converted Organics is to release around US$2m for capital expenditures on its New Jersey facility and defer interest payments on the bonds until August.
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The company said it has made the agreement in principle, subject only to the finalisation of documentation, with the holders of its $17.5m of New Jersey Economic Development Authority Bonds.
The funds are being held in a reserve for bond principal and interest payments along with a reserve for lease payments.
The company has also entered into a term sheet with an institutional investor under which it will issue a 10% convertible note in a principal amount of up to $1.5bn at a 10% original issue discount.
Upon the execution of definitive agreements, the investor has agreed to place funds into escrow to acquire $500,000 in principal amount of the note, and will acquire additional $250,000 increments in principal amount of the note on 1 May, 1 June, 1 July, and 1 August.
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By GlobalDataThe note will be convertible at a rate of 85% of the closing bid price of the company’s common stock for the trading day immediately preceding any conversion, subject to anti-dilution rights and adjustments if the company defaults on the note.
Chardan Capital Markets will act as the sole placement agent for the transaction.
