MagneGas Corp., a Tampa-based technology company that counts among its inventions a patented process that converts renewable and liquid waste into MagneGas2 fuel, announced that on June 27, 2016, it entered into an agreement with a single institutional investor for a registered direct placement and concurrent private placement of up to approximately $10.6 million.

MagneGas owns a patented process that converts various liquids and liquid wastes into hydrogen-based fuels. These fuels can be used as a replacement to natural gas or for metal cutting. The company currently sells MagneGas into the metal working market as a replacement to acetylene. The company was featured on the cover of the May-June 2016 issue of Renewable Energy from Waste.

The Securities Purchase Agreement (SPA) provides for the sale of initial gross proceeds of approximately $4 million, which is comprised of $3 million of prefunded warrants and a $1 million Senior Convertible Debenture, which securities are exercisable and convertible into an aggregate number of shares equal to 7,017,544. The SPA also provides for the issuance of an additional investment "greenshoe" common stock purchase warrant for the investor to purchase up to an additional $6.6 million of common stock and warrants at $1.01 per share (approximately 31 percent premium to the closing market price) during the three-month period after shareholder approval is obtained and deemed effective.

At the initial closing, the investor will also receive the following warrants: a Series E-1 common stock purchase warrant to purchase 3,508,772 shares of common stock, which warrant is exercisable 6 months from the date of issuance and will have a term of 7 years; a Series E-2 common stock purchase warrant to purchase 1,754,386 shares of common stock, which warrant is exercisable 6 months from the date of issuance and will have a term of 7 years; an unvested Series E-5 common stock purchase warrant to purchase 3,508,772 shares of common stock, which warrant is exercisable 6 months from the date of issuance and will have a term of 7 years; and an unvested Series E-6 common stock purchase warrant to purchase 1,754,386 shares of common stock, which warrant is exercisable 6 months from the date of issuance and will have a term of 7 years. The Series E-1 and E-5 warrants have an exercise price of $1.05. The Series E-2 and E-6 warrants have an exercise price of $1.30.

The Series E-1, E-2, E-5 and E-6 warrants and the Senior Convertible Debenture are being offered in a concurrent private placement. The Series E-1 and E-2 warrants vest immediately and are exercisable 6 months from the date of issuance. Additionally, in connection with the issuance of the greenshoe warrant, the Series E-5 and E-6 unvested warrants will be issued at closing and will vest ratably only upon the exercise of the greenshoe warrants. To the extent the greenshoe warrants are not exercised before expiration, any unvested warrants will also terminate. The Senior Convertible Debenture issued as part of the initial closing will be convertible into 1,754,386 shares of common stock.
The placement is expected to close on or before June 29, 2016, subject to satisfaction of customary closing conditions.