The Debentures are subordinated to the Company's previous senior financings, have a 30-month maturity, which will extend under the terms of the financing until all of the Company's senior debt has been retired, accrue interest at 15% per annum and are payable at maturity. In the event the Debentures are retired at maturity, the holders are entitled to an additional payment equal to the sum of 25% plus 0.75% for each month (or part thereof) in excess of 30 months that the Debentures have remained outstanding. The Debentures are convertible into 2,884,615 shares of common stock based on a conversion price of $1.56 per share. In addition purchasers of the Debentures received three-year warrants which allow the holders to purchase 865,383 shares of common stock at $1.60 per share.
The majority of the proceeds from the financing will be used to reduce debt as well as other corporate purposes.
Galaxy plans to continue its efforts to raise additional funds for its exploration and development activities.
Galaxy Energy Corporation, a development stage oil and gas exploration and production company, is focusing on acquiring and developing coalbed methane in the Powder River Basin of Wyoming and Montana and other unconventional natural gas properties in the Piceance Basin of Colorado, in addition to exploration activities in Germany, Romania and Texas. The company conducts its exploration activities through two wholly owned subsidiaries, Dolphin Energy Corporation and Pannonian International, Ltd.
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