The financing is comprised of $12.19 million of existing term loan and payables which will refinance existing indebtedness from the balance sheet, plus an additional $1.2 million to be used for continued production growth of metallurgical carbon, the company said in a statement.
The structure enables American Resources to raise up to a total of $25 million over the next 30 days unless expanded and or extended by the company.
"We are extremely pleased with the continued support of our existing lender, business partners and new investors who have participated in this financing round,” said CEO Mark Jensen.
“The closing of this initial tranche represents a significant milestone for us. Importantly, it positions the company for future growth, gives us confidence and provides optionality during these volatile market conditions as consolidation opportunities are presented.”
The company said the closing of the initial tranche provides several benefits:
- Extends substantial amount of senior debt for two years while maintaining a low-leveraged balance sheet.
- Allows participants to convert into equity at a premium to current market prices.
- Positions the company with a strong capital structure to navigate the current economic uncertainty and enables the company to be opportunistic when market conditions normalize.
- Enables American Resources to capitalize on expanding worldwide infrastructure market over the next five years and beyond.
"I am proud of our team's many accomplishments over the past several months, including the restructuring our most recent acquisition, Perry County Resources, as well as organizing a debt capital structure that will provide us with greater flexibility to support strategic organic growth initiatives throughout the rest of this year,” Jensen said.
“We are excited to be unlocking some of the initial growth of our robust metallurgical carbon platform at a time where the market is projecting strong demand over the next five years for our products to support infrastructure projects worldwide.”
The two-year term debt facility bears a 12.5% annual interest and is convertible into Class A Common Stock at $1.05 per share at the option of the investor. Additionally, and in connection with the loan agreement, the company issued lenders warrants to purchase shares of Class A common stock in the amount of 10% of the number of shares to the principal amount lent to the company. Each warrant will carry a two-year term with an exercise price of $1.50.
American Resources said it continues to focus on its growth objective by efficiently leveraging its large number of core mining permits and through identifying strategic, supplemental acquisitions.
The company said it is committed to being one of the lowest-cost operators in the Central Appalachian basin and throughout all its carbon mining, processing, and transportation operations.
With operations in eastern Kentucky and West Virginia, the Indiana-based company extracts, processes, and sells metallurgical carbon to the steel industry.
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