Hercules Technology Growth Capital, Inc.
) has entered into a $30 million loan and security agreement with
OCZ Technology Group, Inc.
). The agreement comprises of a $15 million term loan and a $15
million revolving credit facility.
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As per the terms of the agreement, OCZ Technology has ended its
previous credit facility agreement with
Wells Fargo & Company
). Further, OCZ Technology has withdrawn $10 million term loan
upon signing of the agreement with repayments in 30 monthly
installments commencing from Nov 2013. The remaining $5 million
of the term loan can be withdrawn, provided the company achieve a
certain revenue level for two succeeding quarters and regularly
files with SEC.
Further, OCZ Technology has issued a warrant to Hercules,
enabling the latter to purchase 688,073 shares of OCZ
Technology's common stock at an exercise price of $2.18 per
share. The $10 million of the revolving credit facility is
required to be repaid in full in Apr 2016. The remaining $5
million can be accessed only if OCZ Technology fulfills certain
For OCZ Technology, this agreement will be highly beneficial, as
it would provide capital to strengthen its business, fund future
expansions and sustain newer opportunities.
For Hercules, a specialty finance company that provides venture
capital to technology and life science-related companies, this
credit facility will enhance its clientele list. Also, the
interest income is expected to increase. It is to be noted that
OCZ Technology has presented Hercules with a warrant to buy
common stock. For Hercules, this is an excellent opportunity to
earn profit by exercising the warrant when share prices are high.
Hercules currently carries Zacks Rank #2 (Buy). Other stocks in
the same sector that are performing well and can be recommended
for investment includes
American Capital, Ltd
), which holds a Zacks Rank #1 (Strong Buy).