OCZ Technology Raises $13 Million in Private Placement
OCZ Technology Group announced it has signed definitive agreements with various institutional and accredited investors to raise gross proceeds of approximately $13 million in a private placement of senior secured convertible debentures and warrants.
The debentures are secured by a lien on all of the assets of OCZ Technology Group and its subsidiaries, and are subordinate to the Hercules Technology Growth Capital loan and security agreement.
The debentures carry a 9% interest rate per year, payable in cash, and will mature on the one year anniversary of the closing date. The debentures are convertible into shares of OCZ Technology common stock at a conversion price of $1.70 per share.
In connection with the offering of the debentures, warrants will also be issued at closing that provide investors the opportunity to purchase common stock equal to 75% of the number of shares into which the debentures will be convertible, and at a strike price of $0.75 per share.
In addition, OCZ Technology also announced that it has retained Deutsche Bank Securities as financial advisor to assist the board of directors in evaluating various strategic alternatives available to the company.
At closing, the company will amend its loan and security agreement with Hercules as the company did not meet certain covenants. In connection with the amendment, all of Hercules warrants, or approximately 3.9 million warrants, will be cancelled. This loan will now be payable on June 1, 2014, and will include a loan fee of $6.5 million that will be payable at maturity of the loan and be junior to the debentures. Upon the effectiveness of this amendment, Hercules waives any existing defaults.
San Jose, CA-based OCZ Technology Group is a manufacturer and distributor of solid-state storage solutions and premium computer components.