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BOSTON, Mar 10, 2009 (BUSINESS WIRE) -- Converted Organics Inc. (NASDAQ:COIN) announced today that it has entered into an agreement with the holders of its $17.5 million of New Jersey Economic Development Authority Bonds to release approximately $2.0 million for capital expenditures on its New Jersey facility and to defer interest payments on the bonds until August 2009. These funds had been held in a reserve for bond principal and interest payments along with a reserve for lease payments. As consideration for the release of the reserve funds, the Company agreed to issue the bond holders 2,284,409 Class B Warrants, which may be exercised at $11.00 per warrant share.
Today the Company also entered into a securities purchase agreement with an institutional investor under which, upon stockholder approval, it will issue a 10% convertible note in a principal amount of up to $1,500,000 at a 10% original issue discount. The investor has placed funds into escrow to acquire $500,000 in principal amount of the note, and will acquire four additional $250,000 increments in principal amount of the note with the first increment occurring on the 30th day after receiving the stockholder approval discussed below, and the remaining three increments monthly thereafter. The convertible note will be convertible at a rate of 85% of the closing bid price of the Company's common stock for the trading day immediately preceding any conversion, subject to anti-dilution rights and adjustments if the Company defaults on the note. The convertible note will mature one year from the date the escrowed funds are released to the Company, which will be upon the approval of the Company's stockholders discussed below. As consideration for the financing, the Company agreed to issue the investor up to 1,713,307 Class B Warrants, on a pro rata basis as funds are released to the Company, which may be exercised at $11.00 per warrant share. The Company agreed to provide the investor with registration rights for the Class B warrants and the common stock underlying the convertible note and Class B warrants.
Under NASDAQ's marketplace rules, the Company is required to obtain stockholder approval to issue the convertible note and warrants.
Chardan Capital Markets, LLC acted as the sole placement agent for this transaction.
About Converted Organics Inc.
Converted Organics (NASDAQ:COIN, www.convertedorganics.com), based in Boston, MA, is dedicated to producing high-quality, all-natural, organic soil amendment and fertilizer products through food waste recycling. The Company uses its proprietary High Temperature Liquid Composting (HTLC) system, a proven, state-of-the-art microbial digestion technology, to process various biodegradable food wastes into dry pellet and liquid concentrate organic fertilizers that help grow healthier food and improve environmental quality. Converted Organics sells and distributes its environmentally-friendly fertilizer products in the retail, professional turf management, and agribusiness markets.
Converted Organics' flagship manufacturing facility is located in Woodbridge, New Jersey. A second manufacturing site is located in Gonzales, California, and a third is under development in Johnston, Rhode Island. Converted Organics' products have been tested in numerous field trials for more than a dozen crops with the result that, on average, the net value of the farmer's crop increased 11-16 percent, depending on the particular crop and product application. This is due, in part, to the disease suppression characteristics of the product, which reduce or eliminate the need for other costly, often toxic, crop protection applications. In a number of lab and field trials, Converted Organics' liquid product has been shown to be effective in mitigating powdery mildew, a leaf fungus that affects most plants and grasses and restricts the flow of water and nutrients to the plant. Increased use of nitrogen in commercial agriculture and turf grass applications, such as on golf courses, has reduced the soil's ability to absorb nitrogen and other nutrients. Using the products produced by Converted Organics helps restore the soil by replenishing these micronutrients. This reduces the amount of nitrogen required in a virtuous cycle that benefits from long-term use. As a result, use of the product reduces chemical run-off to streams, ponds and rivers, an objective with significant long-term benefits to the environment.
Converted Organics' products have a long shelf life compared to many other organic fertilizers. The Company's fertilizer products can be used on a stand-alone basis or in combination with more traditional fertilizers and crop protection products. Converted Organics expects to benefit from increased regulatory focus on organic waste processing and on environmentally-friendly growing practices.
This press release contains forward-looking statements that are subject to risks and uncertainties. These forward-looking statements include information about possible or assumed future results of our business, financial condition, liquidity, results of operations, plans and objectives. In some cases, you may identify forward-looking statements by words such as "may," "should," "plan," "intend," "potential," "continue," "believe," "expect," "predict," "anticipate" and "estimate," the negative of these words or other comparable words. Forward-looking statements include the Company's ability obtain stockholder approval for the issuance of the convertible note and warrant.These statements are only predictions. One should not place undue reliance on these forward-looking statements. The forward-looking statements are qualified by their terms and/or important factors, many of which are outside the Company's control, involve a number of risks, uncertainties and other factors that could cause actual results and events to differ materially from the statements made. The forward-looking statements are based on the Company's beliefs, assumptions and expectations of our future performance, taking into account information currently available to the Company. These beliefs, assumptions and expectations can change as a result of many possible events or factors, including those events and factors described in the "Risk Factors" section in the Company's most recently filed annual report on Form 10-KSB, as updated in the Company's quarterly reports on Form 10-Q filed since the annual report, not all of which are known to the Company. Neither the Company nor any other person assumes responsibility for the accuracy or completeness of these statements. The Company will update the information in this press release only to the extent required under applicable securities laws. If a change occurs, the Company's business, financial condition, liquidity and results of operations may vary materially from those expressed in the aforementioned forward-looking statements.
COIN-G
SOURCE: Converted Organics Inc.
PR Financial Marketing
Investor Contact:
Jim Blackman, 713-256-0369
jim@prfmonline.com
or
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