MGT Capital Investments, Inc. (NYSE-MKT: MGT.BC), announced today that it has entered into two agreements with various institutional investors providing $5.9 million of capital in support of the Company’s strategy to monetize intellectual property. The capital raise is comprised of the sale of $4.5 million of Series A Convertible Preferred Shares (which include Warrants to purchase MGT common stock), plus a separate sale of $1.4 million of MGT Common Stock.
Subject to the approval of NYSE MKT and other customary closing conditions, the Preferred Shares will be convertible into the Company’s common stock at a fixed price of $3.26 per share and carry a 6% dividend. The Warrants have a five-year life and are exercisable at $3.85 per MGT share; the Company will issue a total of 2.8 million Warrants in the deal. This transaction is expected to close on or before October 26, 2012.
This offering is being made in reliance upon the exemption from securities registration afforded by Section 4(2) of the Securities Act of 1933, as amended, and Rule 506 of Regulation D, as promulgated by the United States Securities and Exchange Commission under the 1933 Act.
Chardan Capital Markets LLC acted as sole financial advisor in the sale of the Preferred Shares and Warrants.MGT also completed an agreement to sell 453,000 shares of its Common Stock at a price of $3.01, under its S-3 Registration Statement, which was declared effective on September 25, 2012 by the U. S. Securities and Exchange Commission. Closing of this transaction is also expected on or before October 26, 2012, and is also subject to NYSE MKT approval. In an earlier step to improve the Company’s financial flexibility and reduce capital costs, MGT repaid at face value the entire $3.5 million issue of its Senior Secured Convertible Notes on October 10, 2012. As a result of all announced and completed capital transactions, MGT is now debt-free, and will have approximately $7.0 million in cash and 3.0 million common shares outstanding.