Maui Land & Pineapple raises $40M on note sale
The company will use the funds to pay debts and finance projects
Maui Land & Pineapple Co.
said yesterday it raised $40 million by selling convertible notes to four funds that list their residency in the Cayman Islands.
The notes, or corporate securities exchangeable for common shares, are due in 2013 to accredited investors.
MLP said it will use the proceeds for debt repayment and development projects.
The notes will pay interest quarterly at an annual rate of 5.875 percent and are convertible into shares of MLP's common stock at an initial conversion price of $33.50 a share.
The conversion price is a 12 percent premium to the volume-weighted average stock price during the past 30 trading days.
MLP closed down $4.60, or 13.85 percent, at $28.62 yesterday. The announcement was made just before trading opened on the New York Stock Exchange yesterday.
The notes will be secured by the assets of MLP and its subsidiaries, the company said. MLP may require holders to convert their notes on or after the second year of their issuance if the company's stock has traded above undisclosed thresholds.
The notes were offered and issued only to accredited investors in a private placement.
As of MLP's latest quarterly filing on March 31, its total debt, was $93.2 million, compared to $61.7 million on Dec. 31, 2007.
The increase in outstanding debt for the first three months of the year was from operating losses, a $7.8 million contribution to Kapalua Bay Holdings LLC and Kapalua Resort project expenses. As of March 31, the company had available credit lines of $41.7 million.
Expenditures for the company's community development segment capital projects and deferred development costs are expected to be up to $14 million this year. The company said in its latest annual report that its financial results are highly dependent on that segment.
MLP lost $740,000 in the first quarter, compared with a $15.7 million profit a year earlier from the sale in March 2007 of the land underlying the Ritz-Carlton Kapalua hotel.
The Kahului-based agriculture and real estate company said last week it is laying off 274 employees, or 26.2 percent of its 1,045-person work force, to save $11 million in annual operating expenses. Its largest-ever round of layoffs come in the face of a weak economy and rising costs of energy, the company said.