Color Star Technology Announces Pricing of Initial $7.0 Million Tranche of up to $33.0 Million Registered Senior Secured Convertible Notes
Rhea-AI Summary
Color Star Technology Co., (Nasdaq: ADD) has announced the pricing of a $7.0 million initial tranche of up to $33.0 million in registered senior secured convertible notes. The company has entered into agreements with institutional investors to purchase $7.6 million in convertible notes with an 8% original issue discount, resulting in net proceeds of approximately $7 million. The notes have a 12-month maturity and a 6.0% annual interest rate.
The notes will be convertible into Class A Ordinary Shares 45 days after the closing date, with an initial conversion price of $1.60 or an alternative conversion price. The offering also includes registered warrants to purchase up to 2.9 million Ordinary Shares, exercisable 45 days after issuance with a five-year expiration and an exercise price of $1.60 per share. Maxim Group is acting as the sole placement agent for this offering, which is expected to close around September 30, 2024.
Positive
- Secured $7 million in net proceeds from convertible notes
- Potential for additional $26 million in funding through the same agreement
- Warrants issued with potential to raise additional capital
Negative
- 8% original issue discount on convertible notes
- Potential dilution of existing shareholders due to convertible notes and warrants
- Short-term debt with 12-month maturity may create financial pressure
News Market Reaction
On the day this news was published, ADD declined 11.02%, reflecting a significant negative market reaction.
Data tracked by StockTitan Argus on the day of publication.
NEW YORK, Sept. 27, 2024 (GLOBE NEWSWIRE) -- Color Star Technology Co., Ltd. (Nasdaq: ADD) (“Color Star” or the “Company”), an entertainment technology company with a global network that focuses on the application of technology and artificial intelligence in the entertainment industry, today announced it has entered into securities purchase agreements with certain institutional investors (the “Investors”) to purchase senior secured convertible notes in the aggregate principal amount of
Under the terms of the securities purchase agreements, the Convertible Notes will be issued to the Investors, together with registered warrants to purchase up to an aggregate of approximately 2.9 million Ordinary Shares. The warrants to be issued at the First Closing will be exercisable 45 days after issuance, subject to certain conditions (the “Initial Exercise Date”), will expire on the five-year anniversary of the Initial Exercise Date, and will have an exercise price of
Maxim Group LLC is acting as the sole placement agent in connection with the offering.
Subject to the satisfaction of certain conditions, the Company and the Investors may mutually agree to the purchase and sale of additional Convertible Notes and accompanying warrants for up to an additional aggregate amount of
The securities described above are being offered pursuant to a shelf registration statement on Form F-3 (File No. 333-281668), which was declared effective by the United States Securities and Exchange Commission (“SEC”) on August 28, 2024. A prospectus supplement relating to the securities will be filed by the Company with the SEC. Copies of the prospectus supplement relating to the offering, together with the accompanying prospectus, can be obtained at the SEC’s website at www.sec.gov or from Maxim Group LLC, 300 Park Avenue, New York, NY 10022, Attention: Syndicate Department, or via email at syndicate@maximgrp.com or telephone at (212) 895-3500.
This press release does not constitute an offer to sell or the solicitation of an offer to buy, nor will there be any sales of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.
About Color Star Technology Co., Ltd.
Color Star Technology Co., Ltd. (Nasdaq: ADD) is an entertainment and education company that provides online entertainment performances and online music education services. Its business operations are conducted through its wholly-owned subsidiaries, Color Metaverse Pte. Ltd. and CACM Group NY, Inc. The Company’s online education is provided through its Color World music and entertainment education platform. More information about the Company can be found at www.colorstarinternational.com and www.colorstar.investorroom.com.
Forward-Looking Statements
This press release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. When the Company uses words such as "may," "will," "intend," "should," "believe," "expect," "anticipate," "project," "estimate" or similar expressions that do not relate solely to historical matters, it is making forward-looking statements. Forward-looking statements are not guarantee of future performance and involve risks and uncertainties that may cause the actual results to differ materially from the Company's expectations discussed in the forward-looking statements. These statements are subject to uncertainties and risks including, but not limited to, the following: the Company's goals and strategies; the Company's future business development, including the development of the metaverse project; product and service demand and acceptance; changes in technology; economic conditions; the growth of the educational and training services market internationally where ADD conducts its business; reputation and brand; the impact of competition and pricing; government regulations; the ability of Color Star to meet NASDAQ listing standards in connection with the consummation of the transaction contemplated therein; and other risks and uncertainties described herein, as well as those risks and uncertainties discussed from time to time in other reports and other public filings with the Securities and Exchange Commission by Color Star. For these reasons, among others, investors are cautioned not to place undue reliance upon any forward-looking statements in this press release. Additional factors are discussed in the Company's filings with the U.S. Securities and Exchange Commission, which are available for review at www.sec.gov. The Company undertakes no obligation to publicly revise these forward–looking statements to reflect events or circumstances that arise after the date hereof unless required by applicable laws, regulations or rules.
Contact
Color Star Investor Relations
Office Number No. 1003, 9th Floor,
7 World Trade Center, Suite 4621
New York NY 10007
Office: (212) 410-5186
Email ir@colorstarinternational.com
FAQ
What is the initial tranche amount for Color Star Technology's (ADD) convertible notes offering?
When will the convertible notes for Color Star Technology (ADD) mature?
What is the interest rate on Color Star Technology's (ADD) convertible notes?
When is the expected closing date for Color Star Technology's (ADD) initial tranche of convertible notes?
