AtheroNova Inc. (OTCMKTS:AHRO) announced that it received a notice of debt acceleration from Europa International Inc. It has filed details on Form 8-K to SEC. Europa is the firm that holds 2.5% Senior Secured Convertible Note issued by AtheroNova in the principal amount of $427,500.
The issued notes to Europa were payable on November 12, 2014. The holder had rights to accelerate debt under the 2.5% Note on November 26. AtheroNova tried to get an extension of the maturity date, but it yielded no positive results. The debt acceleration under the 2.5% Note gives right to the holder to get 120% of the outstanding principal amount along with accrued and unpaid interest. The holder is also entitled to receive expenses and other costs incurred in the process. The 2.5% Senior Secured Convertible Note began to accrue 12% interest per year, effective November 26.2014.
The default case
If AtheroNova Inc. (OTCMKTS:AHRO) defaults under the 2.5% Note, it will have to face default under each of its other outstanding 2.5% Note with a principal outstanding amount of $753,667. Also, it applies to 8% Senior Secured Convertible Notes and 6% Notes with a principal outstanding amount of $500,000 and $1.86 million respectively. As a result, interest under the 8%Notes and 6%Notes will accrue at 24% per annum
In the event of such a default, each holder of 8% Note or 6% Note may choose to accelerate the indebtedness linked to these notes. Debt acceleration under those notes will allow the holder to receive 120% of the outstanding principal and accrued interest or the product that will have highest closing price for five trading days after debt acceleration. The holder will be entitled to receive the greater amount. In second option, the conversion price on the determination date will be multiplied by a percentage of the outstanding principal. Europa elected debt acceleration under the other 2.5%Note.