Company will sell up to $4 million of 12% one-year convertibles
By Angela McDaniels
Tacoma, Wash., May 14 - Aura Systems Inc. plans to place up to $4 million of 12% senior secured convertible notes and settled an initial $750,000 tranche on May 9.
The tenor of the notes is 12 months, and they are convertible into common shares at an initial conversion price of $0.75 per share, according to an 8-K filing with the Securities and Exchange Commission.
The conversion price is a 74.4% premium over the company's $0.43 closing share price on May 8.
If the company receives at least $5 million of gross proceeds from the sale of equity securities in one or series of related transactions on or before June 15 (a "subsequent financing"), the buyers may put back their notes or may elect to cancel the notes and receive in exchange securities upon the same terms and form as issued to investors in the subsequent financing.
If a subsequent financing is not completed by June 15, the interest rate of the notes will automatically increase to 16% and the conversion price will automatically be reset to $0.50 per share.
The company may not prepay the notes until the earlier of the date a subsequent financing is completed and June 15.
The investors also received seven-year warrants for 1 million shares. The exercise price is $0.75 per share.
If the company makes certain dilutive issuances, the conversion price of the notes and the exercise price of the warrants will be lowered to the per-share price for the dilutive issuances.
Exchange agreement
On May 9, the company entered into an exchange agreement with 15 holders of warrants for 5.39 million shares of the company's common stock. The warrants were issued in connection with the company's September 2011 private placement.
Under the exchange agreement, the company agreed to issue a total of 4,581,500 shares to the warrant holders (equal to 85% of the total number of shares of common stock purchasable under the warrants) in exchange for the cancellation of the warrants.
Based in El Segundo, Calif., Aura Systems develops power-generation systems.
| Issuer: | Aura Systems Inc.
|
| Issue: | Senior secured convertible notes
|
| Amount: | $750,000
|
| Maturity: | 12 months
|
| Coupon: | 12%
|
| Conversion price: | $0.75
|
| Warrants: | For 1 million shares
|
| Warrant expiration: | Seven years
|
| Warrant strike price: | $0.75
|
| Settlement date: | May 9
|
| Stock symbol: | OTCBB: AUSI
|
| Stock price: | $0.43 at close May 8
|
| Market capitalization: | $31.35 million
|
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