engage:BDR Limited (ASX: EN1) has announced the amendment in Convertible Securities Agreement inked with CST Investment Fund. As per the revised terms of an agreement, CST Investment Fund will now provide the total fundraising of up to $5.875 million to EN1 that reflects an addition of up to USD 5.2 million growth capital to the already raised fund of the USD 675,000.
The company informed that under the revised terms, there will be immediate funding of an additional USD 720,000 before cost which would support the company to accelerate its revenue growth through additional payments to publishers. For this purpose, engage: BDR commits to issue 800,000 loan notes at an issue price of USD 0.90 per note and a maturity date of 90 days from a drawdown of funds. The company further explained that these notes are secured debt instruments which have a face value of USD 1.00 per note and have no conversion rights.
As per the company’s information, the amended terms of the Convertible Securities Agreement also provide that until 29 January 2021 the company may issue up to 6 further tranches of up to 800,000 convertible securities each to the Investor, subject to shareholders’ approval and other prescribed conditions.
“The funds raised will be used for incremental revenue-generating publisher payments and for general working capital,” stated engage: BDR.
A drawdown fee equivalent to 2% of the aggregate Face Value of the convertible securities will reportedly be applied to the 800,000 loan notes and any subsequent issues of convertible notes under the revised Convertible Securities Agreement. Moreover, the company reported that under the revised terms, it is required to redeem an equal installment of the Convertible Notes every month commencing 120 days after the issue of the 800,000 loan notes and any subsequent issues of convertible notes. The redemption may reportedly be done in cash or by the issue of shares at the pre-determined variable conversion price.
Advertising and digital media company engage: BDR further stated that the 800,000 loan notes and any subsequent issues of convertible notes are in addition to the loan notes issued in November 2018, the replacement of which with convertible notes was approved at yesterday’s general meeting. Under the terms of the Note applicable to the 800,000 loan notes and potential subsequent purchases, the company explained that any subsequent purchases will be at intervals of not less than 60 days after the previous tranche.
Among the many amended terms, the parties have agreed that the issue of convertible securities by the company should not cause the aggregate Face Value of all outstanding convertible securities to exceed the minimum of US$950,000 or 12% of the company’s market capitalization.
With this update, EN1’s stock price nosedived 21.053% to last trade at $0.030 on 30 January 2019. Over the past 12 months, the stock has witnessed a meltdown of 78.29% including a negative price change of 32.14% seen over the past three months.
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