By Laura Lutz
Des Moines, March 3 - China North East Petroleum Holdings Ltd. arranged a $15 million private placement of debentures, according to a news release.
The investor is Lotusbox Investments Ltd., a subsidiary of Harmony Investment Fund Ltd., which is managed by Harmony Capital Managers Ltd.
An initial funding of $1.75 million has already closed. The remaining $13.25 million will be released from escrow when certain post-closing conditions have been met within the next 30 days.
The debenture bears interest at 8% per year and is amortized over four years. The company will be required to make quarterly interest payments and semiannual principal payments.
Harmony Investment Fund will also receive three tranches of five-year detachable warrants. The initial strike prices are $0.01 for 1.2 million shares, $3.20 for 1.5 million shares and $3.45 for 2.1 million shares.
The warrants with a strike price of $3.20 are callable after one year if the company's stock is trading at or above $4.80.
In connection with the deal, China North East is also required to obtain a listing on a U.S. exchange within one year.
About $10 million of the proceeds will be used for the drilling of 100 new wells. The rest will be used for potential acquisitions, to implement technologies to increase production of existing wells and for working capital.
China North East is a crude oil production company based in Harbin, China.
| Issuer: | China North East Petroleum Holdings Ltd.
|
| Issue: | Debentures
|
| Amount: | $15 million
|
| Maturity: | Four years
|
| Coupon: | 8%
|
| Price: | Par
|
| Yield: | 8%
|
| Conversion: | No
|
| Warrants: | For 4.8 million shares
|
| Warrant expiration: | Five years
|
| Warrant strike price: | $0.01 for 1.2 million; $3.20 for 1.5 million; $3.45 for 2.1 million
|
| Investor: | Lotusbox Investments Ltd., subsidiary of Harmony Investment Fund Ltd.
|
| Pricing date: | March 3
|
| Stock symbol: | OTCBB: CNEH
|
| Stock price: | $2.15 at close Feb. 29
|
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