Algae.Tec Limited (ASX:AEB) announced that it has finalized a private placement to issue 1,500,000 convertible notes at $1 per note for gross proceeds of $1,500,000 on January 22, 2016. The company has received applications for $800,000. The notes carry a fixed coupon rate of 12.5% per annum with a term of 18 months. The interest is payable quarterly and satisfied by way of issue of shares or payment of cash at the discretion of the investor. Those notes converted at maturity will be accompanied by two separate unlisted options for every two shares received on conversion. First option will have a term of 12 months from the date of the notes maturity and be exercisable at $0.1 per share and second option will have a term of 24 months from the date of the notes maturity and an exercise price of $0.2 per share.

On the same day, the company received $650,000 in its first tranche. The 650,000 notes will be convertible to maximum of 15,752,551 ordinary shares.