S&W Seed Company enters stalking horse bid for Chromatin sorghum assets

September 5, S&W Seed Company announced that it has entered a stalking horse bid of $23.0 million to purchase substantially all of the assets of Chromatin, Inc., a U.S.-based sorghum operator, which entered into receivership earlier this year. If successful with the bid, S&W anticipates the transaction would close in October 2018.

To assist in funding the potential acquisition and provide additional working capital, S&W has entered into a Securities Purchase Agreement with MFP Partners, L.P., S&W's largest shareholder, providing total proceeds of approximately $27.5 million.

S&W will discuss further details of the process and potential attributes of the transaction during its regularly scheduled year-end financial results conference call to occur later this month.

Asset Purchase Agreement

On September 5, 2018, S&W entered into an Asset Purchase Agreement with Novo Advisors, solely in its capacity as the receiver for, and on behalf of, Chromatin in a receivership action pending in the United States District Court for the Northern District of Illinois. Pursuant to the Asset Purchase Agreement, S&W agreed to purchase substantially all of Chromatin's assets, as well as assume certain of its contracts, for a purchase price of $23.0 million.

Pursuant to the court-approved sale procedures, other parties have an opportunity to submit a competing bid by September 7, 2018 (or such later date as the Receiver and Chromatin's bank may agree) and, if a qualified competing bid is submitted, an auction would be held on September 13, 2018. A court hearing to consider approval of the Asset Purchase Agreement and the related asset acquisition or, if an auction is held, the winning bid at the auction, is scheduled for September 17, 2018.

The closing of the transaction is contingent upon, among other things, (a) the outcome of this sale process, (b) the entry of a sale order by the United States District Court for the Northern District of Illinois, (c) the written consent of Chromatin's bank and all other all other holders of any liens and security interests on the purchased assets, and (d) Novo obtaining executed written consents to the assignment of certain contracts.

Securities Purchase Agreement

On September 5, 2018, the Company entered into a Securities Purchase Agreement with MFP, pursuant to which the Company concurrently sold 1,607,717 shares of common stock to MFP at a purchase price of $3.11 per share, and agreed to sell to MFP 7,235 shares of a newly designated Series A Convertible Preferred Stock for a purchase price of $3,100 per share at a subsequent closing, each in a private placement. The preferred shares are convertible into shares of common stock at a conversion price of $3.11 per share. The sale of the shares of preferred stock is contingent upon, among other things, the entry of the sale order and the other conditions to the closing of the Chromatin transaction having been satisfied or reasonably expected to be satisfied. The Company expects to use the proceeds from the financing to purchase the Chromatin assets and for working capital purposes.

The shares of preferred stock will carry no voting rights and will be automatically converted into shares of common stock upon the Company's receipt of stockholder approval of the issuance of the common stock upon conversion of the preferred stock. The Company has agreed to use its reasonable best efforts, promptly following the entry of the sale order, to solicit this stockholder approval. In connection with the stockholder approval requirement, on September 5, 2018 S&W entered into a Voting Agreement with the holders of a majority of the outstanding shares of its common stock, pursuant to which these holders agreed to vote their shares in favor of the issuance of the foregoing shares of common stock.

This release is neither an offer to sell nor a solicitation of an offer to buy any securities of S&W Seed Company.