7 February 2011

DayStar agrees $5m securities purchase with Socius and extinguishes $3.6m in debt

DayStar Technologies Inc of Milpitas, CA, USA, which is developing copper indium gallium diselenide (CIGS) thin-film photovoltaic products, has entered into a $5m securities purchase agreement with Socius CG II Ltd, a subsidiary of Socius Capital Group.

Daystar has the right over a term of two years (subject to certain conditions) to require Socius to purchase up to $5m of redeemable Series B Preferred Stock. With each purchase, Socius will receive two-year warrants to purchase shares of common stock valued at 35% of the Preferred Stock amount. The exercise price of the warrants will equal the closing bid price of the common stock on the preceding day. In addition, Socius will be entitled to exercise an additional investment right for 60 days after each sale of Preferred Stock to purchase common stock valued at 100% of the amount of the Preferred Stock, at a per-share price equal to the exercise price of the warrants associated with the sale of Preferred Stock.

“This flexible financing arrangement, with a proven partner in Socius Captial, will strengthen our balance sheet and will better position us as we continue our discussions with potential strategic partners,” says CEO Magnus Ryde. “The partnerships we are pursuing, if consummated, could include joint ventures, licensing agreements, contract manufacturing agreements, a reverse merger with or an acquisition of DayStar,” he adds.

DayStar has also extinguished an additional $3.6m in debt from its balance sheet through the conversion to equity of certain convertible notes payable, as well as agreements with vendors to settle their liabilities in exchange for shares of DayStar’s common stock. This follows a prior series of agreements with vendors (announced at its 2010 Annual Shareholder meeting on 30 December) to eliminate $5m in debt. Previously, in October, Socius entered into agreements with 14 of DayStar’s vendors to purchase about $1m of DayStar’s debt, settling the resulting amounts owed in exchange for free-trading shares of the firm’s common stock.

“We appreciate the continued support of our vendors and other stakeholders,” says Ryde. “We have nearly completed our balance sheet restructuring and other activities to enhance our ability to pursue strategic transactions.”

See related items:

DayStar eliminates $5m of debt as strategic partnership talks continue

DayStar cuts loss as it reduces debt and expenses

Tags: DayStar CIGS

Visit: www.daystartech.com

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