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Odyssey to Receive Short-Term, Debt Financing from MINOSA for Offshore Mineral and Resource Exploration

Odyssey Marine Exploration, Inc., a pioneer in the field of deep-ocean exploration, today announced the signing of a strategic financing agreement with Minera del Norte S.A. de c.v. (MINOSA), an owner and operator of mines and mineral rights (with worldwide assets of more than $750 million and net sales of $900 million) to facilitate Odyssey's offshore mineral and resource exploration.

Under the agreement, MINOSA will extend short-term, debt financing to Odyssey of up to $14.75 million. In addition, Penelope Mining LLC, a wholly-owned subsidiary of MINOSA, has agreed to invest up to $101 million over three years in convertible preferred stock of Odyssey. The debt and the equity financings are subject to the satisfaction of certain conditions including those described below under "Financing Terms."

Mark Gordon, President and CEO of Odyssey commented that, "The debt financing will enable us to continue our ongoing operations, and the equity financing will help position us to dramatically advance our business of locating and recovering assets on the sea floor and to enhance our potential to deliver substantial value to stockholders."

Odyssey Chairman Greg Stemm observed that, "We are looking forward to working with the MINOSA team as we build the growth potential of Odyssey. During the time that we have been working on this transaction, we have come to gain great respect for the depth of expertise and resources available through their team."

Financing Terms

The financing transaction includes both an initial loan from MINOSA to a wholly-owned subsidiary of Odyssey and a stock purchase agreement between Odyssey and Penelope Mining.

The up to $14.75 million of loans to Odyssey will be at 8% interest and will be secured by a pledge of Odyssey's interest in a subsidiary that owns seafloor mining rights. Upon the initial sale of the AA-1 Preferred Stock, Odyssey will use a portion of the net proceeds to repay this indebtedness. If Odyssey shareholders do not approve the equity transaction, the loans will mature on September 30, 2015, unless extended in certain circumstances to March 31, 2016. In addition, MINOSA will receive a call option to purchase a controlling interest in the subsidiary for $40 million, which MINOSA may not exercise once the equity closing occurs, so long as the conditions to the continued equity financing are satisfied. Closing of the equity transaction is subject to, among other things, the approval of Odyssey stockholders, the receipt of regulatory approval, performance by Odyssey of its obligations under the stock purchase agreement, receipt of certain third party consents, the listing of the underlying common stock on Nasdaq, and Penelope Mining in its sole discretion being satisfied with the viability of certain undersea mining projects. There can be no assurance that such conditions will be satisfied or that the transaction will be consummated. Upon closing of the equity transaction, Penelope Mining will purchase $35 million of Odyssey's newly issued Series AA-1 Convertible preferred stock priced at $1.00 per share. The Odyssey Convertible Preferred Stock will have a liquidation preference equal to its purchase price, plus an accretion rate of 8% per annum. The Preferred Stock will be convertible into common stock on a 1:1 basis.

After the initial closing and subject to the satisfaction of certain conditions to continued funding, Penelope Mining will be obligated to purchase additional shares of Series AA-1 Convertible Preferred Stock at a price of $1.00 per share based on the following schedule:

  • March 1, 2016  $21.7 million
  • September 1, 2016  $21.7 million
  • March 1, 2017  $18.2 million
  • March 1, 2018  $4.5 million

Upon completion of such purchases, Penelope Mining will own a majority of the outstanding voting power of Odyssey. In addition, Penelope Mining will have the right to accelerate its purchase of Series AA-1 Convertible Preferred Stock, and if Odyssey common stock trades above $1.26 per share for a minimum of 20 consecutive days, Penelope Mining will have the right to purchase a specified number of shares of Series AA-2 Convertible Preferred Stock priced at $0.50 per share designed to provide Penelope Mining with ownership of 65% of the fully-diluted voting power in Odyssey.

The $1.00 per share price of the AA-1 Convertible Preferred Stock represents a 59% premium to the closing price of Odyssey's common stock of $0.6285 on March 11, 2015, the last closing price prior to the signing of the transaction agreements. The blended price of AA-1 and the optional AA-2 Convertible Preferred shares should all of the shares be purchased is $0.77, which represents a 22% premium to the closing price of Odyssey's common stock on March 11, 2015. If all Preferred Shares are subscribed, Penelope Mining will invest a total of $144 million of equity capital into Odyssey.

Other Matters

As part of the stock purchase agreement, Odyssey stockholders will be asked to approve a 1-for-6 reverse stock split, the classification of Odyssey's board of directors into three classes, and the election of designees of MINOSA to a majority of the positions on the classified board. It is anticipated that the 1-for-6 reverse split will be implemented prior to the first stock purchase pending shareholder approval. All share numbers and per share prices will be adjusted accordingly.

Odyssey plans to solicit approval of the transaction from its stockholders within the next 90 days. Directors and officers of Odyssey holding 4,978,265 shares have executed agreements to vote in favor of the transaction.

Odyssey has also amended and restated its bylaws to provide for among other things litigation forum selection in Nevada, its jurisdiction of incorporation, and fee shifting in the case of certain stockholder suits.

Important Additional Information

Odyssey plans to file with the U.S. Securities and Exchange Commission (SEC) and mail to its stockholders a proxy statement in connection with the financing transaction. The proxy statement will contain important information about Odyssey, the transaction and related matters. Investors and security holders are urged to read the proxy statement carefully when it is made available.

Investors and security holders will be able to download copies of the proxy statement and other documents filed with the SEC by Odyssey through the web site maintained by the SEC at These documents can also be requested by contacting the Liolios Group at 1-949-574-3860 or by emailing [email protected].

Odyssey and its directors and executive officers may be deemed to be participants in the solicitation of proxies from Odyssey's stockholders with respect to the transactions contemplated by the agreement. Information regarding Odyssey's directors and executive officers is contained in Odyssey's Annual Report on Form 10-K for the year ended December 31, 2013, and its proxy statement dated April 19, 2014, which are filed with the SEC. As of December 31, 2014, Odyssey's directors and officers beneficially owned approximately 6.6 million shares, or 7.5%, of Odyssey's common stock. Additional information regarding the interests of the participants in the solicitation of proxies in connection with the transaction will be included in the proxy statement.


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