By Nick Worth
Paring its senior unsecured debt from $153 million down to $25 million last December was a major accomplishment for Prospect Global Resources Inc. (PGR), but now the company has announced a further reduction in the amount it owes to The Karlsson Group, having just inked a deal to lower the amount owed down to $15 million in cash.
Prospect Global is one of the two major potash-mining concerns in the Holbrook basin. The company has owed millions of dollars to The Karlsson Group since agreeing to buy Karlsson’s interest in American West Potash.
On Dec. 17, PGR made a deal with Karlsson to lower the cash owed in the deal from approximately $148 million to $25 million. According to a filing with the Securities Exchange Commission (SEC) in December, Prospect Global had until March 10 of this year to raise the $25 million payoff to Karlsson.
Once March 10 arrived and PGR could not make the $25 million payment to Karlsson, the company was able to negotiate an extension agreement with Karlsson on March 13, moving the date for the $25 million payment from March 13 to April 10, according to a PGR SEC filing.
In this latest deal, PGR has succeeded in lowering the cash payment amount it owes to Karlsson from $25 million to $15 million and has extended the due date by another 13 days, to April 23.
According to a press release from Prospect Global, PGR has filed a registration statement with the SEC for a public offering intended in part to fund this payment.
The Karlsson Group will keep all of its existing rights related to the debt until it is paid off.
The press release states the PGR currently has “approximately $153.1 million of obligations outstanding to its senior secured lender (Karlsson) with a maturity in July 2015. This amount will be extinguished with the $15 million payment.”
Prospect Global will also increase Karlsson’s royalty interest from 2 percent to 3 percent, and issue additional shares of common stock and warrants to purchase common stock as part of the deal.
In related news, PGR has been delisted from the NASDAQ stock Exchange as of Monday.
“On April 3, 2014, we received written notification from The NASDAQ Stock Market that our common stock will be suspended from trading on The NASDAQ Stock Market effective at the open of business on Monday, April 7, 2014,” reads an SEC filing and news release from PGR. The statement notes that the reason for the delisting is that PGR has not achieved compliance with a NASDAQ listing rule that requires a minimum market value of listed common stock of $35 million.
“We have been advised that our common stock will be eligible for trading and quotation on the OTCQB market, under the symbol ‘PGRX,’ effective at the open of the market on Monday, April 7,” reads the SEC filing. “…the OTCQB market is operated by OTC Markets Group Inc., which operates the world’s largest electronic marketplace for broker-dealers to trade unlisted stocks. Investors can find current financial disclosure and quotes for the company at www.otcmarkets.com.”
In the SEC filing, PGR states, “Prospect Global intends to pursue listing on a national exchange upon successful completion of the previously announced extinguishment of its senior secured debt to The Karlsson Group, Inc.”
At the announcement of the move to OTC, PGR stock prices fell to a one-year low of $1.05 per share.
An online check of PGR’s stock prices on Tuesday showed the company listed in the OTC.
By Nick Worth