NEWS !!! NEWS !!! NEWS !!!
NewMarket Technology, Inc. Completes $7 Million Financing Transaction With Institutional Investment Firm to Support New Organic Growth Initiatives
Thursday December 6, 5:25 pm ET
NewMarket Founders Forgive Approximately $4.3 Million in Debt and Accrued Interest Due to Founders From Company
DALLAS, TX--(MARKET WIRE)--Dec 6, 2007 -- NewMarket Technology, Inc. (OTC BB:NMKT.OB - News) today announced completing a $7 million financing transaction with an institutional investment firm which manages a portfolio valued at over $1 billion.
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$3 M Credit Facility and $4 M Term Note Secured by Company Assets
The financing transaction consists of a $3 million revolving credit facility secured by the company's domestic accounts receivable and a $4 million convertible term loan collateralized by the assets of the Company. The rate of conversion is at a fixed price set at the time of closing. The $4 million term loan would only convert debt into stock at a fixed price if principle payments and interest fees were not otherwise paid in cash. As part of the $7 million financing transaction, the Company also issued warrants to purchase 12 million shares of the Company's common stock at a premium to the share price at the time the financing transaction was closed. The potential exercise of the warrants could result in an additional equity investment in NewMarket of approximately $2.7 million. The company's primary intended purpose of the financing transaction is to support aggressive organic sales expansion in North America.
$4.3 M in Existing Debt Forgiven In Conjunction with $7 Million in New Financing
In conjunction with the financial transaction, the NewMarket founders (aka Vergetech and VTI) have agreed to forgive approximately $4.3 million in debt and accrued interest due to the founders from NewMarket. This debt reduction eliminates any further expense and profit burden previously required to service the debt. This debt reduction also eliminates the potential of any further stock being issued to service this debt. The Company has not provided any additional or special consideration to the founders in conjunction with the debt forgiveness.
NewMarket CFO Phil Rauch Highlights Fundamental Financial Foundation
"This $7 million institutional financing agreement is better than most financing arrangements I have observed as being available to OTCBB listed companies. The conversion price of the term note is fixed and the warrant price was set at a premium to the share price at the time of closing. In other words, it is in the institutional investment firm's best interest for the NewMarket share price to increase and for NewMarket's operations to continue growing. The quality of this financing agreement highlights the improving strength of NewMarket's fundamental financial foundation which is further improved by the founders' agreement to forgive approximately $4.3 million in debt. I know the founders consider the debt forgiveness agreement as an investment in the future value of their own holdings in NewMarket. Nevertheless, I want to extend my thanks to the founders for their ongoing and long-term commitment to the Company's continuing success."
