Dakota Plains Holdings Inc. (OTCQB: DAKP) reports the pricing of a registered direct offering of 7 million shares of its common stock at a price to the public of $2.15 per share. The offering is expected to close on Dec. 16.
Dakota Plains expects to receive net proceeds of approximately $14.1 million, after deducting placement agent fees but before paying offering expenses. The company intends to use the net proceeds from the offering to repay a portion of its outstanding indebtedness and for other general corporate purposes.
For the offering, Canaccord Genuity Inc. is acting as lead placement agent and Northland Capital Markets is acting as co-placement agent.
Dakota Plains has also announced entry into agreements to restructure certain of its outstanding debt. Through agreements with holders of its outstanding promissory notes due March 1, 2014, Dakota Plains has extended the maturity of approximately $4.6 million principal amount of indebtedness to September 30, 2014. In addition, certain note holders have reduced the principal amount of their promissory notes due October 31, 2015, by approximately $1.9 million and reduced the number of shares of common stock previously issued, in payment of certain related obligations, by 304,732 shares.
The agreements also provide that, if Dakota Plains completes an offering or placement of not less than $5.0 million worth of its capital stock (a "qualified equity placement") on or before December 10, 2015, then 50% of the proceeds will be used to repay, pro rata in order of maturity, all or a portion of the promissory notes now due September 2014 and approximately $3.9 million principal amount of the promissory notes due October 2015. Additionally, if Dakota Plains completes a qualified equity placement on or before December 10, 2014, then the company may elect to convert approximately $10.0 million aggregate principal amount of remaining promissory notes due October 2015 into shares of common stock at the per-share price used in the offering or placement.
Assuming the previously announced registered direct offering of Dakota Plains common stock, which is scheduled to close on or about December 16, 2013, is completed and results in a qualified equity placement, Dakota Plains expects to exercise its right to convert the promissory notes due October 2015, which would result in the issuance of 4,660,534 additional shares of Dakota Plains common stock. The company will also use 50% of the proceeds from the offering to repay the promissory notes as described above. After completion of the debt reduction described above and the restructuring, Dakota Plains' total promissory notes outstanding will decrease from $26.6 million to $7.7 million.