American Battery Technology Co (NASDAQ:ABAT), a company specializing in nonmetallic mineral mining, has entered into a significant financial agreement. On November 26, 2024, the company secured $12 million through senior secured convertible notes with High Trail Investments ON LLC and High Trail Special Situations LLC.
The convertible notes issued are part of an amended securities purchase agreement from August 29, 2023, and further amended on November 14, 2024. The amendments include changes to the interest rate, conversion rate, collateral, prepayment events, covenants, and liquidity requirements. The notes were purchased at a price ratio of 0.825 of the principal amount.
The notes carry a zero coupon, are due on September 1, 2025, and are backed by specific company assets, including real estate, cash, and investment accounts. Starting January 1, 2025, the buyers have the option to redeem up to $1 million monthly or convert the notes into common stock at varying conversion rates depending on the principal amount.
The issuance of these notes comes with waived default events under the original securities purchase agreement. A.G.P./Alliance Global Partners (NYSE:GLP) served as the sole placement agent for this transaction. The company plans to file the complete terms of the notes and the amendment to the Purchase Agreement with the SEC in their upcoming quarterly report.
In other recent news, American Battery Technology Co has made several significant strides in its operations. The company has formalized new compensation agreements with top executives, issued $12 million in senior secured convertible notes to High Trail Investments ON LLC and High Trail Special Situations LLC, and revealed an At-The-Market (ATM) offering that may intermittently sell common stock shares totaling up to $50 million through Virtu Americas LLC.
In addition, the company has received a $150 million grant from the U.S. Department of Energy for the construction of a second commercial-scale lithium-ion battery recycling facility and secured a binding purchase agreement for its recycled black mass material with a domestic customer.
American Battery Technology has also successfully produced lithium hydroxide with proprietary technologies and plans to construct a refinery capable of producing 30,000 tons of lithium hydroxide annually, supported by a $57.5 million U.S. Department of Energy grant.
InvestingPro Insights
American Battery Technology Co's recent $12 million financing through convertible notes comes at a critical time for the company, as revealed by InvestingPro data and tips. The company's market cap stands at $70.55 million, which is relatively small considering its industry. This financing could be crucial for ABAT's operations, especially given that one InvestingPro Tip indicates the company is "quickly burning through cash."
The financial health of ABAT appears challenging, with InvestingPro data showing a negative gross profit of -$5.3 million and an alarming gross profit margin of -972.0% for the last twelve months. This aligns with another InvestingPro Tip stating that ABAT "suffers from weak gross profit margins." The company's revenue for the same period was only $0.55 million, suggesting that the new funding could be vital for sustaining operations and potentially improving these metrics.
Despite these financial hurdles, ABAT has shown a significant return of 23% over the last week, as noted in both the InvestingPro data and tips. This recent positive momentum could be related to the new financing agreement, potentially indicating investor optimism about the company's future prospects.
For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for ABAT, providing a deeper understanding of the company's financial situation and market position.
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