Intelect Communications Secures $10 Million in Private Equity and $15 Million Credit Facility

Strategic Insights -

Richardson, Texas-based Intelect Communications Inc. has completed a $10 million private equity placement and a $15 million, two-year credit facility, providing the company with the capital resources to fund its operations and support its expansion plans for 1998. The company has received the proceeds of the equity placement and drawn down an initial $3 million advance under the credit facility.

Key Takeaways:

  • Intelect Communications Inc. has completed a $10 million private equity placement, with the entire preferred stock issue placed with investment entities controlled by Citadel Capital Group or its affiliates.
  • The company has also secured a $15 million, two-year credit facility provided by St. James Capital Corp. and its affiliated investment entities.
  • The credit facility provides Intelect with the ability to borrow up to $15,000,000 at a fixed 7% annual interest rate for a 24-month term, with no payments of principal or interest required until maturity.
  • The company may prepay the debt at any time without penalty, and the outstanding balance of the debt is convertible into Intelect common stock at $9.082 per share.
  • The credit facility also provides for the issuance of warrants to purchase Intelect common stock in amounts equal to 15,000 shares for each $100,000 advanced, with an exercise price of $7.50 per share and an expiration date of three years from the date of issuance.
  • Intelect Communications Inc. reported revenues of $24,620,000 and a loss of ($.90) per share for the nine months ended September 30, 1997, compared to revenues of $7,203,000 and a loss of ($1.14) per share for the same period of 1996.
  • The company's principal business units are Intelect Network Technologies Co. and DNA Enterprises, Inc. based in Richardson and Intelect Visual Communications Corp. of New York City.

Statistics:

  • $10 million: amount of private equity placement
  • $15 million: amount of two-year credit facility
  • 7%: fixed annual interest rate on the credit facility
  • $9.082: initial price of the preferred stock
  • 150%: ratio of preferred stock price to average closing price of Intelect common stock
  • $940 million: amount of investor capital controlled by Citadel Capital Group
  • $4 billion: assets managed by Citadel Investment Group
  • 30%: ratio of conversion price to average closing price of Intelect common stock for the preferred stock
  • $13.50: target price per share for conversion of debt into common stock
  • $7.50: exercise price per share for warrants issued under the credit facility
  • 24 months: term of the credit facility
  • 3 years: expiration date of warrants issued under the credit facility

Sources:

  • Intelect Communications Inc. press release dated February 17, 1998
  • Citadel Capital Group's website, accessed on February 17, 1998
  • St. James Capital Corp.'s website, accessed on February 17, 1998
  • Securities and Exchange Commission filings of Intelect Communications Inc., accessed on February 17, 1998.