Placement, credit facility proceeds will be used to open new stores
By Angela McDaniels
Tacoma, Wash., Oct. 22 - LJ International Inc. will sell $13 million of common stock in a private placement, according to a 6-K filing with the Securities and Exchange Commission.
Oasis Investments Ltd., J.P. Morgan Securities Ltd. and Worldwide Gateway Co., Ltd. agreed on Oct. 21 to purchase the shares for $3.25 each, which is a 33.94% discount to the closing stock price of $4.92 on Oct. 20.
The investors will also receive warrants for 4.25% of subsidiary Enzo Jewelry Inc.'s outstanding equity. The warrants will expire on the earlier of four years and the day immediately preceding the subsidiary's initial public offering. The exercise price will be equal to the holder's pro rata portion of $12.75 million divided by that holder's pro rata share of 4.25% of Enzo's stock.
LJ International also received a RMB 90 million credit facility with a 5% interest rate from Industrial and Commercial Bank of China Ltd.
The $26 million of financing will be used to fill retail inventory and working capital needs to finance the opening of at least 60 new stores in 2011.
"The financing package ... provides us with sufficient capital, at very favorable terms, to meet our near-term goal of expanding the Enzo chain to approximately 200 stores," LJ International chairman and chief executive officer Yu Chuan Yih said in a company news release.
"The warrants to buy the stake in Enzo represents a further vote of confidence, because they are conditional on ENZO reaching at least $300 million in market value."
Hong Kong-based LJ International designs, brands, markets and distributes jewelry.
| Issuer: | LJ International Inc.
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| Issue: | Common stock
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| Amount: | $13 million
|
| Shares: | 4 million
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| Price: | $3.25
|
| Warrants: | For 4.25% of Enzo Jewelry Inc.'s outstanding equity
|
| Warrant expiration: | Earlier of four years and Enzo's IPO
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| Warrant strike price: | $12.75 million divided by 4.25% of Enzo's stock
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| Investors: | Oasis Investments Ltd., J.P. Morgan Securities Ltd. and Worldwide Gateway Co., Ltd.
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| Pricing date: | Oct. 21
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| Stock symbol: | Nasdaq: JADE
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| Stock price: | $4.92 at close Oct. 20
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| Market capitalization: | $124.15 million
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