Proceeds used to repay $3 million 10% convertible held by St. Cloud
By Devika Patel
Knoxville, Tenn., April 4 - National Holdings Corp. arranged a $10 million private placement of $4 million in series E convertible subordinated debt and $6 million of series E preferred stock on March 30, according to an 8-K filed Wednesday with the Securities and Exchange Commission.
The debt was issued as 6% convertible subordinated promissory notes and settled in two tranches of $3.3 million on March 30 and $700,000 on April 4. The notes may be put after Dec. 31, 2012 and are due on March 31, 2015.
Each note is convertible into units of one series E preferred and a five-year warrant exercisable into an equal number of shares into which the preferreds are convertible. The warrants are exercisable at $0.50.
The company will sell 120,000 preferreds at $50.00 per preferred in the second tranche, which will also include warrants for a total of 12 million shares. These five-year warrants are also each exercisable at $0.50.
Each preferred is convertible into 100 common shares at an initial conversion price of $0.50 per share.
The strike price for the warrants and conversion price of the preferreds is a 35.14% premium to the closing price on March 27, $0.37.
The investing group, National Securities Growth Partners, LLC, consists of Robert Fagenson, Bryant Riley, Mark Klein and Starfish Capital LLC.
Proceeds from the first note were used to repay the $3 million 10% senior subordinated convertible promissory note held by affiliates of St. Cloud Partners, LP. The remaining proceeds from the notes and preferreds will be used for general corporate purposes.
New York-based National Holdings is the holding company for National Securities Corp., National Insurance Corp. and National Holdings Mortgage Corp.
| Issuer: | National Holdings Corp.
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| Issue: | Series E convertible subordinated promissory notes, series E preferred stock
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| Amount: | $10 million
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| Investors: | National Securities Growth Partners, LLC (Robert Fagenson, Bryant Riley, Mark Klein and Starfish Capital LLC)
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| Pricing date: | March 30
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| Stock symbol: | OTCBB: NHLD
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| Stock price: | $0.37 at close on March 27
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| Market capitalization: | $9.13 million
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| Notes
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| Amount: | $4 million
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| Maturity: | March 31, 2015
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| Coupon: | 6%
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| Put: | After Dec. 31, 2012
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| Settlement dates: | March 30 (for $3.3 million), April 4 (for $700,000)
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| Preferreds
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| Amount: | $6 million
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| Preferreds: | 120,000
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| Price: | $50.00
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| Conversion price: | $0.50
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| Conversion ratio: | Into 100 common shares
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| Warrants: | For 12 million shares
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| Warrant expiration: | Five years
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| Warrant strike price: | $0.50
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