"With this transaction we have attained an important objective in our plan to enhance the company's capital structure," said Jerry Winchester, President and Chief Executive Officer. "This restructured agreement provides us with substantially greater flexibility in our long-term strategic planning, improves our ability to reinvest in our business, to pursue opportunities for growth, and greatly simplifies the company's capital structure. All in, this is a great step toward increasing future equity value for our shareholders."
Under the terms of the agreement, the company paid Prudential $2.0 million of principal plus accrued interest of $28,667 on August 13, 2004. The company will pay an additional $1.6 million of principal on December 15, 2004. The remaining balance of $6.0 million will be paid quarterly for five years, at the rate of $300,000 per quarter, through December 31, 2009. The interest rate remains at 12 percent.
In addition, Prudential exchanged its remaining 582 shares of Preferred E for 55,429 shares of common stock. Prudential also received 1.25 million shares of common stock in exchange for its warrants to purchase 2.4 million shares of common stock and 524,206 shares of common stock to pay accrued and unpaid dividends owed on Series E and Series G Preferred Stock. After this transaction, the company's subordinated debt to Prudential will be $7.6 million, of which $1.6 million will be paid before year-end.
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