ZaZa Energy Corporation (“ZaZa”) (NASDAQ: ZAZA) today announced the pricing of its offering of $40.0 million aggregate amount of Convertible Senior Notes due 2017 (the “Convertible Notes”) in a private placement to qualified institutional buyers and accredited investors. ZaZa intends to use the net proceeds from the offering, after discounts and offering expenses, to fund drilling capital expenditures and leasehold transactions and for general corporate purposes.
The Convertible Notes will be the senior, unsecured obligations of ZaZa. They will bear interest at a fixed rate of 9.0% per year, payable semiannually in arrears on February 1 and August 1 of each year, beginning February 1, 2013. Interest on the Convertible Notes will accrue from October 22, 2012. The Convertible Notes will mature on August 1, 2017, unless earlier converted, redeemed or repurchased.
The Convertible Notes will be convertible at any time prior to the third trading day immediately preceding the maturity date, at the option of the holders, into shares of ZaZa’s common stock. The conversion rate will initially be 400.0000 shares of common stock per $1,000 principal amount of Convertible Notes (equivalent to an initial conversion price of $2.50 per share of common stock), and will be subject to adjustment upon the occurrence of certain events. In addition, ZaZa will, in certain circumstances, increase the conversion rate for holders who convert their Convertible Notes in connection with a make-whole fundamental change (as such term will be defined in the indenture relating to the Convertible Notes).
ZaZa may not redeem the Convertible Notes prior to August 1, 2015. On and after August 1, 2015, ZaZa may redeem for cash all or part of the Convertible Notes if the last reported sale price of its common stock equals or exceeds 150% of the applicable conversion price for at least 20 trading days during the 30 consecutive trading day period ending on the trading day immediately prior to the date on which ZaZa delivers the notice of the redemption. The redemption price will equal 100% of the principal amount of the Convertible Notes to be redeemed, plus any accrued and unpaid interest to, but excluding, the redemption date.