Castle Brands Inc. (NYSE Amex: ROX), a developer and international marketer of premium branded spirits and fine wine, today announced that it has entered into definitive agreements to issue an aggregate of approximately $7.0 million of the Company’s 10% Series A Convertible Preferred Stock, stated value $1,000 per share, in a series of private placement transactions.
Richard J. Lampen, President and Chief Executive Officer of Castle Brands, said, “This is an important transaction for Castle Brands. The additional capital enhances our ability to attract new brands, further strengthens our relationship with distributors and enables us to maintain our path to profitability. The debt conversion also should better position Castle Brands to access traditional third party working capital financing.”
Under the terms of the transactions, the Company will issue approximately $2.2 million of Series A Preferred Stock for its stated value and warrants to purchase an aggregate of approximately 3.6 million shares of the Company’s common stock, to third-party purchasers on or about June 13, 2011. The Company will issue approximately $4.8 million of additional Series A Preferred Stock for its stated value and warrants to purchase an aggregate of approximately 7.9 million additional shares of the Company’s common stock, to certain directors, officers and other affiliates of the Company following shareholder approval of such issuance in accordance with the rules and regulations of the NYSE Amex. Pending shareholder approval, the Company will issue an aggregate of approximately $1.0 million in promissory notes to the affiliate investors; following shareholder approval, such promissory notes and $3.5 million in existing debt of the Company and accrued but unpaid interest thereon will convert to Series A Preferred Stock and warrants to purchase the Company’s common stock. Holders of approximately 41.4% of the Company outstanding common stock have entered into irrevocable agreements to vote their shares in connection with the transactions.