WasteMasters Finalizes $20,000,000 Equity Line of Credit and Receives $500,000 Bridge Funding
EL RENO, Okla.--(BUSINESS WIRE)--Nov. 15, 2000--WasteMasters, Inc. (OTCBB: WAST - news) announced that on November 7, 2000 it closed on two financing agreements which will enable the company to complete its restructuring and pursue a number of promising business initiatives.
First, the Company entered into a $20 million Equity Line of Credit Agreement with Linicro Investments. Under the Equity Line of credit, Linicro is obligated to purchase up to $20 million in shares of the Company's common stock. Each purchase will be made at between 82% and 90% of the bid price for the company's common stock at the time of the request, with the exact percentage depending on the use of the proceeds and the bid price of the Company's common stock at the time of the draw request. The amount the Company can draw at any given time will be the lesser of $2,500,000 or ten percent of the weighted average price of the Company's common stock for the thirty trading days prior to the request multiplied by the total trading volume for the same thirty trading days. The Company may draw on the Equity Line no more often than every fifteen days, except it may draw on the Equity Line within eight days of a prior draw if the draw is related to a special activity, such as an acquisition. Funding by Linicro under the Equity Line is subject to a number of conditions, including but not limited to the registration of any common stock issuable under the Equity Line under the Securities Act of 1933, and that all representations and warranties of the Company under the agreement are true and correct at the time of any draw. As consideration for entering into the Equity Line, the Company issued Linicro a warrant to purchase 3,000,000 shares of the Company's common stock at 110% of the closing price for the common stock on the date of closing.
Second, the Company issued $500,000 of its 10% Senior Secured Convertible Debentures to three investors. The Debentures bear interest at 10% per annum, provide for quarterly payments of interest only until maturity, mature two years after issuance, and are secured by 800,000 shares of common stock of Global Eco-Logical Services, Inc. At the option of the investors, the Debentures are convertible into shares of the Company's common stock at the lesser of 70% of the average of the closing bid prices for the Company's common stock for five trading days prior to the closing date or 75% of the average of the five lowest closing bid prices for the twenty-two trading days prior to the date of any conversion. As consideration for entering loaning the Company funds pursuant to the Debenture, the Company issued the investors warrants entitling them to purchase, in the aggregate, 3,000,000 shares of the Company's common stock at 105% of the closing price for the common stock on the date of closing.
Under both the Equity Line and the Debentures, the Company is obligated to file within thirty days a registration statement with the Securities and Exchange Commission to register the shares issuable under the Equity Line, upon exercise of the warrants and upon conversion of the debentures. The Company is further obligated to obtain approval of the registration within 120 days, and to maintain the effectiveness of the registration statement until the investors have disposed of their securities in the Company.
WasteMasters intends to use this financing, among other things, to complete its restructuring; to improve and expand its base of operations in Philadelphia and the surrounding regions; fund its newly formed subsidiary Appalachian Environmental Recovery, Inc. (a subsidiary formed to clean up coal waste sites left after coal mining operations have ceased); complete an additional waste cell at the company's Lisbon Ohio based landfill; and to provide working capital.
Leon Blaser, Chairman and CEO of WasteMasters stated, ``This bridge financing provides WasteMasters with short term funds to grow the Philadelphia and Ohio markets. While the largest impact of this financing will be felt in 2001, the financing will definitely improve the fourth quarter. The $500,000 bridge funding is just the beginning of many better days to come for the shareholders of the Company. This funding provides the company with adequate working capital to strongly develop its current markets in the near term. We anticipate that more traditional debt facilities and equity participants will be forthcoming.''
WasteMasters collects, transfers and landfills waste primarily through its operations in Pennsylvania and Ohio. |
