BitNile Holdings, Inc., a diversified holding company announced that it has sold $58.4 million of principal face amount 10% Original Issuance Discount Promissory Notes to sophisticated investors for $52.2 million The Notes are due and payable on March 31, 2022, accrue interest at the rate of 8% per annum and are secured by a majority of the assets of the Company, as well as a pledge of the equity interests in the Company’s subsidiaries.
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The investors who participated in the Financing received warrants to purchase approximately 12.4 million shares of the Company’s common stock, exercisable for five years at $2.50 per share on a cashless basis, subject to adjustment. Further, the investors received a different kind of warrant that entitles them to purchase approximately 1.7 million shares of Common Stock, exercisable for five years at $2.50 per share on a cashless basis, subject to adjustment, with certain Black-Scholes valuation terms, including a $1.25 floor price on the closing bid price of the Company’s common stock.
The repayment terms of the Notes provide that while the Notes are outstanding, to the extent that the Company raises additional funds from future financing transactions or the sale of any Bitcoin, the Company will make a payment on the Notes equal to 65% of the net proceeds from such transactions.
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The purchase agreement for the Notes provides for registrations rights related to the warrants issued in conjunction with the Notes. The Company agreed to file a resale registration statement on Form S-3 registering all of the shares of Common Stock underlying the warrants as well as any other shares of common stock issuable to certain of the investors underlying previously issued warrants.
The Notes are guaranteed by the Company’s Founder and Executive Chairman, Milton “Todd” Ault, III and by Ault & Company, Inc., a related party.
The proceeds from the Note offering will be used for the purchase of commercial real estate, the purchase of Bitcoin mining equipment and general working capital purposes.
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