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Tantech Holdings Ltd (NASDAQ:TANH) entered into a note purchase agreement with Streeterville Capital, LLC, closing the transaction on Tuesday. According to a press release statement, Tantech issued and sold a promissory note with an original principal amount of $3,230,000 to Streeterville for $3,000,000 in gross proceeds. The company stated it will use the net proceeds for working capital and general business purposes.
Under the agreement, Tantech is required to comply with several covenants until all obligations under the note are fulfilled. These include maintaining its listing on NASDAQ or the New York Stock Exchange, complying with Securities Exchange Act requirements, and refraining from certain restricted issuances without Streeterville’s prior written consent. Restricted issuances generally include the incurrence of new debt or the issuance of convertible securities with terms linked to market prices.
Streeterville has the right to participate in up to 30% of any Tantech convertible debt financings while the note is outstanding. If Tantech breaches participation rights, Streeterville is entitled to liquidated damages equal to 20% of the participation amount.
The promissory note carries a 7% annual interest rate and matures 12 months after the purchase price is delivered. It includes an original issue discount of $210,000 and $20,000 allocated for Streeterville’s transaction expenses. Tantech may prepay the note at 105% of the outstanding balance. Starting six months after the purchase date, Streeterville may redeem up to $750,000 of the outstanding balance per month, with Tantech required to pay the redeemed amount in cash within three trading days of notice.
The agreement specifies provisions for trigger events, which may increase the note balance by up to 25% and, in some cases, result in default and accelerated repayment at a higher interest rate.
Between October 2 and October 15, Tantech and Streeterville entered into five exchange agreements. Under these, portions of a previous note issued in August 2024 were exchanged for common shares. The exchanges resulted in the issuance of a total of 365,343 common shares in exchange for $520,000 in principal from the original note. These share issuances relied on exemptions from registration under the Securities Act.
All information is based on a press release statement filed with the SEC.
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