Associated Appliances, Inc. Prices Senior Secured Notes Offering

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Associated Appliances, Inc. has announced private placement of senior secured convertible notes issue due 2019 aggregating principal amount of US $14.50 million paying a yearly interest rate of 7.50% payable on June 15 and December 15 every year.

Associated Appliances, Inc. ("Associated"), the manufacturer and trader of smart appliances (primarily smart refrigerators, microwaves, dishwashers and television) operational under the Internet of Things (“IoT”) category with vast manufacturing facilities based in India and network of OEM partners in China today announced the pricing of its offering of $14.50 million dollar denominated aggregate principal amount of Convertible Senior Secured Notes due 2019 (the "Convertible Notes") in a private offering under the Securities Act of 1933, as amended (the "Securities Act"). Associated will also grant the initial purchasers of the Convertible Notes a 30-day option to purchase up to an additional $2.90 million aggregate principal amount of the Convertible Notes. The sale of the Convertible Notes is expected to close on May 15, 2014, subject to customary closing conditions.

Associated expects that the net proceeds from this offering of Convertible Notes will be approximately $13.92 million, after deducting initial purchasers' discounts and estimated offering expenses payable by Associated. Associated intends to use approximately $7.50 million of the net proceeds to invest in its manufacturing capabilities in India and China and to repay partial debt of its Indian manufacturing subsidiary called “Associated Appliances Limited” and the remaining US $6.42 million will be invested in setting up trading business of smart appliances in the United States of America.

The Convertible Notes will be Associated's senior secured obligations, secured by first lien on substantially all of Associated's assets in India. The Convertible Notes will bear interest at a rate of 7.50% per year, payable semi-annually in arrears on June 15 and December 15 of each year, commencing May 15, 2014. The Convertible Notes will mature on December 15, 2019, unless earlier converted, redeemed or purchased by Associated.

The conversion rate, which is subject to adjustment, will initially equal 250.00 shares of Associated's common stock per $1,000 principal amount of Convertible Notes (which is equivalent to an initial conversion price of approximately $4.00 per share of common stock). Associated will initially deliver for each $1,000 principal amount of converted Convertible Notes a number of shares of its common stock equal to the conversion rate. Associated agrees to buy back common stock at the rate of US $5.00 per share, in case the company remains unlisted due to any commercial reason. In case, the stock is listed, the investor can either sell or retain common stock, or participate in the common stock buyback program, if in any case the traded value of common stock is less than US $5.00 per common stock.

Associated may not redeem the Convertible Notes prior to December 15, 2017. Associated may redeem for cash all, but not less than all, of the Convertible Notes, at its option, on or after December 15, 2017, at a redemption price equal to 125% of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest.

If Associated undergoes a fundamental change (as defined in the indenture governing the Convertible Notes), holders of Convertible Notes may require Associated to purchase all or a portion of their Convertible Notes for cash at a price equal to 125% of the principal amount of the Convertible Notes to be purchased plus accrued and unpaid interest, if any, to, but excluding, the fundamental change purchase date. In addition, if certain fundamental changes occur, Associated may be required in certain circumstances to increase the conversion rate for any Convertible Notes converted in connection with such fundamental changes by a specified number of shares of its common stock.

The indenture governing the notes is relying on the strong asset base of Associated Appliances Limited in India which stands 1.75x to the aggregate principal amount of US $14.50 million. Both Associated (USA) and Associated Appliances Limited (India) restricts itself to raise any further debt (including bank or private debt) till December 15, 2019.

The offering is being made to qualified institutional buyers pursuant to Rule 144A under the Securities Act. Neither the Convertible Notes nor any shares of Associated's common stock issuable upon conversion of the Convertible Notes have been or are expected to be registered under the Securities Act or under any state securities laws and, unless so registered. For investors other than USA, Associated relies on the Regulation S.

This press release does not constitute an offer to sell or a solicitation of an offer to buy any securities, nor shall it constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale is unlawful.

Associated Contacts:
Amit Kaushik, CEO
Akshay Sharma, Senior Vice President
Associated Appliances, Inc.

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Amit Kaushik
Associated Appliances Inc.
+1 302-261-2008
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