Oaktree Capital Management !!!! Now this can be explained..
The investment of new capital by Oaktree, in conjunction with the amended bank credit facility, will provide Diamond with sufficient liquidity to meet its anticipated near-term and long-term funding needs. The Oaktree investment initially consists of $225 million of newly-issued senior notes and warrants to purchase approximately 4.4 million shares of Diamond common stock. The senior notes will mature in 2020 and will bear interest at 12 percent per year that may be paid-in-kind at Diamond's option for the first two years. Oaktree's warrants will be exercisable at $10 per share, and would constitute a fully diluted ownership level of approximately 16.4 percent of the Company.
The agreements provide that if Diamond secures a specified minimum supply of walnuts from the 2012 crop and achieves profitability targets for its nut businesses for the six-month period ending January 31, 2013, all of the warrants will be cancelled and Oaktree may exchange $75 million of the senior notes for convertible preferred stock of Diamond. The convertible preferred stock would have an initial conversion price of $20.75, which represents a 3.5 percent discount to the closing price on April 25, 2012, the date that the Company entered into its commitment with Oaktree. The convertible preferred stock would pay a 10 percent dividend that would be paid in-kind for the first two years.
"We are pleased with the progress across our walnut initiatives and with the efforts over the last three months to restore and strengthen the company's relationships with its growers at a time of record walnut prices," added Brian Driscoll. "These extensive efforts, along with the goal of providing competitive prices and terms for our growers, are focused on reestablishing the success of this business and expanding our leadership position in the walnut industry."
The amendment to Diamond's senior secured credit facility with its lenders includes a lower level of total bank debt, initially at $475 million, along with substantial covenant relief until October 31, 2013.