Stardust Solar arranges $1.5-million private placement

Executive Summary

• Stardust Solar Energy Inc. announced a non-brokered private placement of up to 1,500 senior secured convertible debenture units for aggregate gross proceeds of up to $1.5 million.
• The offering is led by Plaza Capital at a price of $1,000 per unit, with proceeds intended for a solar project in Zambia and general working capital.
• Each unit consists of a $1,020 principal debenture and 6,800 common share purchase warrants, with specific conversion and exercise prices subject to anti-dilution adjustments.

Key Details

• Transaction Structure: Non-brokered private placement of up to 1,500 senior secured convertible debenture units.
• Gross Proceeds: Up to $1.5 million.
• Price Per Unit: $1,000.
• Lead Investor: Plaza Capital.
• Unit Composition:
  • One senior secured convertible debenture with a principal value of $1,020.
  • 6,800 common share purchase warrants.
• Debenture Terms:
  • Maturity: 24 months following closing.
  • Interest Rate: 10% per annum, payable in cash on the last business day of each month.
  • Default Interest: Increases to 25% per annum upon any event of default.
  • Security: Collaterally secured by a general security agreement over all present and after-acquired property, guarantees from subsidiaries (Stardust Solar Holdings Inc., Stardust Solar Franchise Inc., Stardust Solar Technologies Inc., and Stardust Solar Technologies USA LLC), and a pledge of shares held by the company in the guarantors.
• Conversion Terms:
  • Conversion Price: 15 cents per common share.
  • Adjustment: If the company issues shares or convertible securities below the conversion price, the conversion price lowers to the new issue price, subject to a floor of 11.5 cents.
• Warrant Terms:
  • Quantity: 6,800 warrants per unit.
  • Exercise Price: 21 cents per common share.
  • Term: 24 months following closing.
  • Adjustment: If the company issues shares or convertible securities below the exercise price (or issues warrants/options with lower exercise prices), the exercise price lowers to the lower price (or 140% of the deemed issuance price if no warrants/options were issued), subject to a floor of 11.5 cents.
• Use of Proceeds: Solar project in Zambia, general and administrative expenses, marketing, and working capital.
• Expenses: Company to reimburse lead investor for reasonable out-of-pocket expenses up to $25,000.
• Regulatory/Listing: Subject to TSX Venture Exchange approval and applicable securities legislation.
• Hold Period: Statutory hold period of four months plus a day from issuance.
• Closing Conditions: Subject to corporate and regulatory approvals; not subject to a minimum aggregate subscription amount; may close in one or more tranches.