Not every debt-for-equity deal puts a souped-up Mustang in its investors’ driveways, but then not every company has Steve Saleen’s product line.
Saleen, the founder of Saleen Automotive, recently negotiated a capital infusion of up to $10 million that will deliver a Black Label Mustang or its equivalent for each $1 million in new debt or preferred stock.
“I know it’s not your typical return on an investment,” Saleen said of the Mustangs, Camaros, Challengers and Teslas he customizes into turbo-charged vehicles at his Corona, Calif., factory.
Since the starting price for each Saleen car is about $75,000, the company’s new creditor, SM Funding, is already fast out of the gate.
But the returns stand to accelerate, given the deal also includes up to $2 million in senior notes that pay 12 percent, and up to $8 million in preferred stock that will ultimately give the lending group 61 percent of publicly traded Saleen.
Cyrano Group’s David Bergstein, who’s credited with negotiating terms for SM Funding, also exacted a two-year, $25,000-a-month consulting fee for his advisory firm. At the closing, meanwhile, Saleen Automotive must take out a $15 million “key man” insurance policy on its founder, who was a professional race-car driver before going into the car-customization business in 1984.
Saleen’s stock hasn’t traded above a penny since May. And though it rose 1.5 percent in over-the-counter trading Monday, it still didn’t qualify as, literally, a penny stock.
Saleen, who’s been chasing capital since going public via a reverse merger in 2013, said the terms were fine.
“This delivers just enough so we can focus on executing,” he told The Post.
[Source: New York Post]