As announced in a press release on July 6, 2007, Balykshi LLP, a subsidiary of Caspian, reached an agreement with the European Bank of Reconstruction and Development ("EBRD") to provide $32 million in debt financing towards the $80 million Atash marine base project. The EBRD has also agreed to acquire a $10 million equity stake in Balykshi LLP. Under the terms of the agreement with the EBRD, Caspian is required to make an equity contribution of $29.8 million to Balykshi LLP. The completion of the private placement will permit Caspian to satisfy this requirement. All of the conditions to commence with the project have now been completed and ground breaking on the marine base is expected to commence in the nearest future.
Commenting on the successful closing of the private placement, Laird Garrard, CEO of Caspian Services said, "The commencement of construction of the Atash marine base is a significant step toward further improving the Company's growth outlook and raising its profile as a leading oil service provider in the Caspian region. The facility will provide a launching pad for entry into a multitude of additional oilfield services as well as enhance the competitive edge of our existing businesses."
In the private placement, Caspian sold a total of 2,807,775 Units at a price of $9.00 per Unit, raising gross proceeds of approximately $25.3 million USD. Each Unit consists of three shares of Caspian common stock and a warrant to purchase an additional share of Caspian common stock for three years for $4.00. These warrants are callable by Caspian in certain circumstances.
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