Harbor Custom Development Inc. (NASDAQ:HCDI) has announced the pricing of its $36 million underwritten public offering.
The company said it is offering 2.4 million shares of 8% Series A Cumulative Convertible Preferred Stock and 12 million warrants to each purchase one share of common stock.
Each share of Series A Preferred Stock will be accompanied by five warrants. Each share of Series A Preferred Stock and accompanying five warrants is being offered at $15 apiece. The shares of Series A Preferred Stock and warrants will be issued separately but can only be purchased together.
Harbor Custom said it has granted the underwriters a 45-day option to purchase up to 360,000 additional shares of Series A Preferred Stock and/or 1.8 million additional warrants solely to cover over-allotments, if any.
Each share of Series A Preferred Stock is convertible into common shares at a conversion price of $4.50 per common share, or 5.556 common shares, at any time at the option of the holder, subject to certain customary adjustments.
The warrants are exercisable immediately, have an exercise price of $2.97 per share and expire five years from the date of issuance.
If the trading price of Harbor Custom’s common stock equals or exceeds $7.65 per share for at least 20 trading days in any 30 consecutive trading day period, the company can call for mandatory conversion of the Series A Preferred Stock. Dividends on the Series A Preferred Stock shall be cumulative and paid monthly in arrears starting July 20, 2021, to the extent declared by the board of directors of the company.
The Series A Preferred Stock will not be redeemable for a period of three years from June 9, 2021, except upon a change of control of the company.
The offering is expected to close on October 7, 2021, subject to the satisfaction of customary closing conditions. The warrants began trading on The Nasdaq Capital Market on October 5, 2021, under the symbol HCDIZ.
ThinkEquity is acting as sole book-running manager for the offering.
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