Allegiance Coal Limited (ASX:AHQ) announced that it has entered into a convertible subscription agreement with new investor Mercer Street Global Opportunity Fund LLC, a fund managed by Mercer Street Capital Partners, LLC for private placement of zero coupon redeemable subordinated secured convertible notes for gross proceeds of AUD 8,000,000 on July 31, 2020. The company will issue 2,333,333 notes at a price of AUD 0.85714298 per note for proceeds of AUD 2,000,000 and 6,900,000 notes at a price of AUD 0.869565217 per note for gross proceeds of AUD 6,000,000 in the transaction. The notes will be issued in draw-downs of AUD 2,000,000 being the first drawdown at a discount of 16.67% of principal value of AUD 2,333,333 and up to AUD 6,000,000 being the second drawdown at a discount of 15% of the principal value of AUD 6,900,000 each with a term of 12 months commencing on each drawdown. The first drawdown will take place in two parts with AUD 661,804.19 drawn down consisting of 772,105 notes at AUD 0.85710 per note being issued on August 5, 2020 with a face value of AUD 772,104.78 convertible into a maximum of 25,736,826 common shares and AUD 1,338,195.81 drawn down consisting of 1,561,228 notes at AUD 0.85710 per note being issued on September 16, 2020 with a face value of AUD 1,561,228.22 convertible into maximum of 52,040,940 common shares subject to shareholder approval. The notes are convertible at the investor election in company’s share with the first drawdown conversion price being the lesser of AUD 0.10, or 92% of the lowest daily weighted average price volume of company’s shares subject to a floor of AUD 0.10 for the first two months following note execution and second drawdown being at a lesser of AUD 0.15, or 90% of the lowest daily weighted average price volume of company’s shares with for both the draw-downs, the conversion price will not be less than AUD 0.03 per share. The company may repurchase the notes at any time prior to maturity by repaying the note at face value together with a premium of 3% of face value, subject to the investor having the right to convert 30% of the amount sought to be re-purchased into company’s ordinary shares. As consideration for the note, company will pay a fee of AUD 200,000 to the investor payable in common shares at an issue price of AUD 0.06768 per share as AUD 50,000 being 738,770 shares immediately and AUD 150,000 being 2,216,313 shares following its shareholder approval meeting on September 9, 2020.