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KiOR closes on second tranche of Khosla funding

By Erin Voegele | May 28, 2014

KiOR Inc. has closed on the second $5 million tranche under its recently announced $25 million funding agreement with Vinod Khosla’s KFT Trust. The disclosure was made in a May 22 U.S. Security and Exchange Commission filing.

According to the 8-K filed by KiOR, the second tranche closed on May 22 and consisted of the purchase of $5 million of Senior Secured Notes (the 2014 Notes) by KFT Trust in exchange for a like amount of cash. The initial $5 million tranche closed April 3 and consisted of the purchase of $5 million in 2014 Notes in exchange for a like amount of cash.

The agreement with Khosla’s trust was announced on April 1. Under the agreement, the trust will invest up to $25 million in monthly tranches of no more than $5 million per month. The closing of future tranches depends on KiOR’s ability to satisfactorily achieve certain milestones. Under the agreement, up to $15 million in additional 2014 Notes could be purchased by KFT Trust in three upcoming tranches. 

According to the SEC filing, KiOR issued KFT Trust a 2014 Warrant to purchase an aggregate of 872,600 shares of Class A common stock at an exercise price of 57.3 cents per share in connection with the second tranche closing. That price was the consolidated closing bid price for KiOR’s Class A common stock on March 31. The filing also notes the 2014 Warrant was issued as partial consideration for KFT Trust’s entry into the Note Purchase Agreement and will expire seven years from the date of the grant. Each 2014 Warrant may be exercised by payment of the exercise price in cash or on a net issuance basis.

KiOR filed its first quarter financial results with the SEC on May 12. In that filing, the company indicated it has suspected all optimization projects in order to bring the Columbus, Miss., facility to a safe, idle state. The company also recently announced it has received two notifications of deficiency from the Listing Qualifications Department of the NASDAQ stock market. The notifications apply to both the company’s Class A common stock and its publically held shares. In its March 17 annual report, KiOR expressed doubts about its ability to continue operating. Without additional funding from the KFT Trust or another source, the company has noted it would likely be forced to file for bankruptcy protection. 

 

 

1 Responses

  1. Cliff Claven

    2014-06-01

    1

    At this funding pace, it appears that Khosla's intent is not to restore KiOR to active operations, but to buy out the capital assets ahead of bankruptcy with Senior Secured Notes that will trump all other creditors when the time comes. Those holding conventional stocks should see right through this and bail out before their holdings are completely worthless.

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