A123 Systems Enters Into Definitive Documentation Relating to Bridge Loan facility and 8.00% Convertible Notes ($AONE)
"On August 16, 2012, the Company and Wanxiang entered into definitive documentation relating to the bridge loan facility and the sale of the 8.00% Convertible Notes, all as more specifically described in this Current Report on Form 8-K." The terms appear to be consistent with what was in the MOU filed earlier. My primary point of curiosity was any update regarding the sub notes. Here is the summary in this filing:
"3.75% Convertible Subordinated Notes . At least 90% of the initial principal amount of the Company’s 3.75% Convertible Subordinated Notes (the '3.75% Notes') shall have been converted into shares of Common Stock and/or purchased and cancelled by the Company on terms satisfactory to Purchaser in its sole discretion."The wording in the MOU was a requirement for the "conversion or repurchase of at least 90% of the Company’s outstanding 3.75% Convertible Notes".
The writing on the wall still seems to be clear that the current equity is going to get massively diluted by the exchange/conversion/retirement of the current notes, before it has a chance to get diluted by the new warrants and convertible notes.
Part of the rationale for that must be that the sub notes are due before the new convertible notes would be, which would hurt the value of the new notes. So, they need to be taken care of.