Dragonfly Energy details term loan for business combination

Chicago, Sept. 29 – Dragonfly Energy Corp. detailed the negotiated terms of a term loan for the planned business combination with Chardan NexTech Acquisition 2 Corp. (CNTQ), according to an 8-K filing with the Securities and Exchange Commission.

The $75 million term loan be advanced in a single tranche on the closing date and will have a four-year tenor.

Until April 1, 2023, interest will be at SOFR plus 1,035 basis points, 700 bps payable in cash and 650 bps paid in kind.

From April 1, 2023 to Oct. 1, 2024, interest will be at SOFR plus 700 bps, payable in cash with another 450 bps to 650 payable in kind, based on the senior leverage ratio.

After that, it will be all cash payable at SOFR plus 1,150 bps to 1,350, based on the leverage ratio.

There is a 1% floor for SOFR.

Amortization of 5% per year starts 24 months after closing.

Prepayment will be at 105 before the first anniversary, 103 between year one and two, 101 between year two and three and par after the third anniversary.

There will also be penny warrants issued to the initial term loan lenders. Lenders may purchase 5.6% of the company’s common stock on a fully diluted basis. The penny warrants have a 10-year exercise period. There will also be a $10 warrant, exercisable for 1.6 million shares at $10 per share. The $10 warrants have a five-year exercise period.

CCM Investments 5 LLC and EICF Agent LLC are the initial term loan lenders.

Dragonfly Energy Corp. is a Reno, Nev.-based manufacturer of deep cycle lithium-ion batteries.

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