On March 16, 2016, Hydra Industries Acquisition Corp. (the Company) issued a non-interest bearing convertible promissory note in the amount of $250,000 (the Notes) to each of Hydra Industries Sponsor LLC (the Hydra Sponsor) and MIHI LLC (the Macquarie Sponsor and, collectively with the Hydra Sponsor, the Sponsors). Payment on all of the Notes is due on the date on which the Company consummates its initial business combination (the Business Combination).
The Notes are convertible, in whole or in part, at the payees election, upon the consummation of the Business Combination. Upon such election, the Note will convert into warrants, at a price of $0.50 per warrant. These warrants will be identical to the private warrants issued in a private placement in connecti on with the Companys initial public offering. As such, each warrant is exercisable for one-half of one share of the Companys common stock, par value $0.0001 per share, at an exercise price of $5.75 per half share.
The Notes were issued pursuant to the Expense Advancement Agreement, dated as of October 24, 2014, by and among the Company and the Sponsors, pursuant to which each Sponsor committed to fund up to $250,000 to the Company for the Companys expenses relating to investigating and selecting a target business and other working capital requirements. Funds in the Companys trust account will not be used to repay any of the Notes (unless a Business Combination is consummated).
A copy of each Note is filed with this Current Report on Form 8-K as Exhibit 10.1 and Exhibit 10.2, respectively, and is incorporated herein by reference, and the foregoing description of the Notes is qualified in its entirety by reference thereto.
Unregistered Sales of Equity Securities
The information set forth in Item 2.03 of this Current Report on Form 8-K is incorporated by reference into this Item 3.02. An aggregate of 500,000 warrants would be issued to each Sponsor if the principal balances of the Notes are converted. The Company has relied upon Section 4(a)(2) of the Securities Act of 1933, as amended, in connection with the issuance and sale of the Notes, as the Notes were issued to sophisticated investors without a view to distribution, and were not issued through any general solicitation or advertisement.
Item 9.01. Financial Statements and Exhibits.
Promissory Note, dated March 16, 2016, by Company in favor of Hydra Industries Sponsor, LLC.
Promissory Note, dated March 16, 2016, by Company in favor of MIHI LLC.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: March 22, 2016
HYDRA INDUSTRIES ACQUISITION CORP.
/s/Martin E. Schloss
Name: Martin E. Schloss
Title: Executive Vice President, General
Counsel and Secretary
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Other recent filings from the company include the following:
Confidential treatment order - April 20, 2017
Registration statement under Securities Act of 1933 - April 7, 2017
Departure of Directors or Certain - March 29, 2017