Reporting on how i-Technology is transforming Washington & governments worldwide

GovIT News

Subscribe to GovIT News: eMailAlertsEmail Alerts
Get GovIT News: homepageHomepage mobileMobile rssRSS facebookFacebook twitterTwitter linkedinLinkedIn


Related Topics: Government News

News Item

Digital Surveillance Company to Repurchase $50 Million Convertible Notes

China Security & Surveillance Technology, Inc. to sell in a registered direct offering 9.36 million shares of its common stock

China Security & Surveillance Technology, Inc. ("CSST") announced that it has entered into definitive agreements with certain accredited investors   at a price at $6.25 per share under its Form S-3 Registration Statement resulting in gross proceeds to the Company of $58.5 million, before deducting placement agent fees and expenses of the offering. In addition, the Company has issued to the investors warrants to purchase 2.3 million shares of common stock, in the aggregate, at a price of $8.16 per share for a term of one year. The closing is subject to certain customary closing conditions and is expected to occur early next week.

The net proceeds from the offering will be used to repay the Company's $50 million Tranche A Zero Coupon Guaranteed Senior Unsecured Convertible Notes for a purchase price of $47.5 million, as specified in a non-binding term sheet signed between the Company and Citadel Equity Fund Ltd. Pending such repayments the Company will use the net proceeds from the offering for working capital and general corporate purposes.

Mr. Guoshen Tu, Chief Executive Officer of CSST, commented, "We are very pleased by the strong interest to our offering and to be able to sign the term sheet with Citadel to retire the Tranche A Notes. We believe the combination of these two transactions will further strengthen our balance sheet, create additional cost savings, improve future cash flows, and enhance our capital structure. These ongoing efforts should augment our financial flexibility and help us support our strategic expansion and long term growth."

This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any jurisdiction. The shares of common stock may only be offered by means of a prospectus. Copies of the final prospectus supplement and accompanying base prospectus can be obtained from Brean Murray, Carret & Co., LLC (570 Lexington Avenue, 11th Floor, New York, NY 10022, fax +1-212-702- 6548), or from China Security & Surveillance Technology, Inc. (13/F, Shenzhen Special Zone Press Tower, Shennan Road, Futian District, Shenzhen, People's Republic of China, 518034).

Existing Notes Details

On September 2, 2009, the Company restructured its two 1% Guaranteed Senior Unsecured Convertible Notes due 2012 into two new tranches of notes: the Tranche A Zero Coupon Guaranteed Senior Unsecured Convertible Notes (the "Tranche A Notes") and the Tranche B Zero Coupon Guaranteed Senior Unsecured Notes (the "Tranche B Notes").

The Tranche A Notes have a principal amount of $50 million, zero coupon interest, and mature on September 2, 2012. The Company will repay the principal amount in six consecutive semi-annual installments, starting March 2, 2010, with 25%, 25% and 50% of the principal amount to be repaid in the first, second and third year, respectively. The conversion price will be $10.00 per share initially, subject to customary conversion price adjustments, anti- dilution protections and a one-time price reset on March 2, 2011 (the 'Reset Date') based on the volume weighted average price of the Company's shares during the 45 trading days immediately preceding the Reset Date, provided that the conversion price shall be adjusted to no lower than $6.00 per share.

The Tranche B Notes, which are not convertible, have a principal amount of $84 million, zero coupon interest, and mature on September 2, 2012. The Company will repay the principal amount in six consecutive semi-annual installments, starting March 2, 2010, with 46%, 46% and 8% of the principal amount to be repaid in the first, second and third year, respectively.

The Company is entitled to redeem the two tranches of notes at any time with no premium or penalty at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus default interest, if any.

More Stories By GovIT News

GovIT News Desk offers timely news and reports on the new wave of Internet-based technologies that are changing the way that Federal agencies leverage, procure and utilize IT.