Synthesis Energy Systems, Inc. Enters into Securities Purchase Agreement
February 21, 2020 at 05:24 pm EST
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On February 19, 2020, Synthesis Energy Systems, Inc. entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain holders of the Company’s 11% Senior Secured Convertible Debentures, pursuant to which, among other things, the holders purchased, in accordance with a private placement offering of the Company, $450,000 in principal amount of additional 11% Senior Secured Convertible Debentures (together, the “Additional Interim Debentures”) and warrants exercisable for up to 300,004 shares of common stock, half of which are Series A common stock purchase warrants and half of which are Series B common stock purchase warrants (together, the “Additional Interim Warrants”). The Additional Interim Debentures and Additional Interim Warrants are issued on substantially the same terms as the debentures and warrants issued in October 2019, provided that the debentures include an adjustment to the conversion price in the event of certain dilutive equity issuances by the Company. As compensation for its services, the Company paid to T.R. Winston & Company, LLC (the “Placement Agent”): (i) a cash fee of $31,500 (representing an aggregate fee equal to 7% of the face amount of the Additional Interim Debentures); and (ii) a warrant to purchase 22,500 shares of Common Stock (the “Placement Agent Warrant”). On February 18, 2020, the Company entered into an amended loan agreement (the “Loan Agreement”) with Australian Future Energy Pty Ltd. (“AFE”), amending the loan agreement entered into with AFE in October 2019. The Loan Agreement contemplates that the Company will loan a portion of the $2,450,000 proceeds that it received under the securities purchase and exchange agreement dated October 10, 2019 between the Company and certain of the holders of the Company’s 11% Senior Secured Convertible Debentures issued in October 2017 (the “Purchase and Exchange Agreement”), as well as under the Securities Purchase Agreement. The Company previously loaned $350,000 to AFE at the time of entering into the original loan agreement, and has loaned an additional $100,000 out of the proceeds of the Additional Interim Debentures. An additional $115,000 will be loaned to AFE upon the receipt of the next tranche of funds by the Company under the Purchase and Exchange Agreement. These loaned amounts are due in full within five days following the closing of the transactions contemplated by the Agreement and Plan of Merger by and among the Company, SES Merger Sub, Inc. and AFE dated October 10, 2019. If the merger transaction does not close, the loan will mature three months following the special meeting of the Company’s stockholders called to approve the merger transactions. The loan accrues interest at 11% per annum and is also due in full upon repayment, subject to an increased default interest rate in certain limited circumstances.
Synthesis Energy Systems, Inc. together with its subsidiaries is a global clean energy company. The Company owns SES Gasification Technology (SGT), which is used for production of synthesis gas. The SGT produces syngas that provide alternative to other forms of energy such as natural gas, liquefied natural gas (LNG), crude oil and the conventional utilization of coal in boilers for power generation. It manufactures clean syngas from a range of natural and renewable resources, such as all forms of coal, biomass, municipal solid waste (MSW), and refuse derived fuels. The Syngas is used to produce a range of clean energy and chemical products such as synthetic natural gas, power, methanol, and fertilizer. The Company is focused on commercializing SGT both in China and globally through the regional business platforms.