BrazAlta Resources Corp. reported that its wholly-owned service company, BCH Ltd. has closed the previously announced USD $40,000,000 Convertible Subordinated Secured Debenture with Allis-Chalmers Energy Inc.
The Debenture bears interest at a rate of 15% payable annually maturing January 31, 2010 and is convertible at Allis-Chalmers' option into common shares of BCH at a conversion price of USD$4.163 per BCH common share, equating to approximately 49% of the post-conversion outstanding common shares. Allis-Chalmers will have the option to acquire the remaining outstanding shares of BCH from BrazAlta on or about maturity of the Debenture at fair market value, to be determined by a mutually agreed upon third party valuator. The Debenture does not provide Allis-Chalmers recourse to BrazAlta for the loan. Management of BCH will remain unchanged. Allis-Chalmers will appoint three nominees to the BCH Board of Directors with the remaining three to be elected by BrazAlta including the Chairman who will have the casting vote to break any tie.
The net proceeds of the Debenture will be used to repay inter-company debt to BrazAlta from BCH and in turn fund BrazAlta's exploration and development program, reduce BCH senior debt principle in the amount of $3.2 million and fund the future growth of BCH's operations. RBC Capital Markets acted as financial advisor to BCH.
Most Popular Articles