Castle Brands Inc. (NYSE Alternext US LLC: ROX), the maker of premium
branded spirits, today announced that it closed the previously announced
private placement pursuant to the purchase agreement entered into on
October 11, 2008 with investors led by Dr. Phillip Frost, I.L.A.R.
S.p.A., the owner of Pallini liqueurs, and Vector Group Ltd., and
received a cash infusion of $15 million. Under the terms of the purchase
agreement, the Company issued 1,200,000 shares of newly created Series A
Convertible Preferred Stock for a price per share of $12.50 (which is,
in effect upon conversion, $0.35 per share of the Company’s
common stock). After approval by the Company’s
stockholders at a special meeting of an amendment to the Company’s
charter to increase its authorized shares, each outstanding share of
Series A Preferred Stock will be automatically converted into 35.7143
shares of the Company’s common stock.
Concurrently with the closing, all of the Company’s
6% convertible notes, in the principal amount of $9 million, due
March 1, 2010, plus accrued interest, were converted into shares of
Series A Preferred Stock at a per share price of $23.21 (which is, in
effect upon conversion, $0.65 per share of common stock). In addition,
substantially all of the outstanding principal of Castle Brands
(USA) Corp.’s 9% senior secured notes, in
the principal amount of $10 million, due May 31, 2009, plus accrued
interest, were converted into shares of Series A Preferred Stock at a
per share price of $12.50 (which is, in effect upon conversion, $0.35
per share of common stock).
The closing of the private placement and the conversion of the notes
(and subsequent automatic conversion of the Series A Preferred Stock
issued in connection therewith) will result in the Company’s
issuance of approximately 86 million shares of common stock. Holders of
Series A Preferred Stock (comprised of the investors and the converting
note holders, many of which are current stockholders of the Company)
own, excluding present ownership, approximately 85% of the Company’s
common stock on an as-converted basis.
Mark Andrews, Chairman of the Board, stated, “We
are very glad to have successfully completed this transaction,
particularly in such a difficult financial environment. It brings a
critically important equity infusion and also eliminates virtually all
of our debt.
