Valence Technology Inc. (Austin, TX) announced that it has agreed to exchange its Series C convertible preferred stock for two new classes of preferred stock, and agreed to terms for the sale of $7.5 million of common stock. The Series C preferred stock outstanding, representing $8.6 million of principal, will be exchanged for $4.3 million of Series C-1 and $4.3 million of Series C-2 preferred stock.
Both new series of preferred stock will be convertible into common stock at $4.00 per share; will carry a 2% annual dividend rate, payable quarterly in cash or shares of common stock; and will mature on December 15, 2005. The new series of preferred stock will be identical in all other respects except that the holder of the Series C-2 preferred stock will have the right to require the company to redeem the Series C-2 preferred stock at any time during the 30 days following June 15, 2005, and September 15, 2005. The company will not receive any proceeds from this exchange.
The company also agreed to sell approximately 2.5 million shares in a new issuance of common stock at a price of $3.03 per share. The common stock will be issued pursuant to the company's existing shelf-registration statement. The company expects to raise net proceeds of approximately $7.0 million. No warrants will be issued as part of this transaction. Proceeds from the financing will be used for working capital and general corporate purposes.
