Earth Biofuels, Inc. Announces Private Offering of $52.5 Million of Senior Convertible Notes
24 July, 2006
DALLAS, TEXAS - Earth Biofuels, Inc. (OTC Bulletin Board: EBOF) announced it has entered into definitive agreements to sell $52.5 million senior convertible notes that are due in 2011 to several institutional and accredited investors in a private placement exempt from registration under the Securities Act of 1933. Cowen and Company acted as the exclusive placement agent for the offering.
The notes initially carry an 8 percent coupon, payable quarterly, and are convertible into shares of common stock at $2.90 per share which represents a premium to the 10-day volume weighted average price. In 2007, the coupon may decline to 6 percent upon the Company achieving certain financial milestones. The notes will begin to amortize in equal, quarterly payments beginning in 2007. The Company also issued warrants to purchase 9,051,725 shares of common stock at $2.90 per share that expire in July 2011.
The Company expects to use the proceeds from the sale for the repayment of its 8 percent senior convertible notes that were previously issued, for its program of building and acquiring interests in biodiesel and ethanol production facilities, and for other general corporate purposes.
The announcement of this placement of senior convertible notes as detailed in this press release shall not constitute an offer to sell or a solicitation of an offer to buy the notes or the shares of common stock issuable upon conversion of the notes. The senior convertible notes and the shares of common stock issuable upon conversion of the notes or exercise of the warrants have not been registered under the Securities Act of 1933 or any state securities laws, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and state securities laws
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