The company said the debentures will mature three years from their date of issuance, and bear interest at a rate of 12 per cent per year, which will be paid quarterly.
The debentures will be able to be converted into common shares of DealNet, at a rate of 20 cents per share, any time prior to the earlier of the maturity date, or the redemption date.
The new funds will be used to implement management's business plan, which includes business development, corporate marketing initiatives, project specific infrastructure and general working capital purposes.
The company will have the right to redeem the debentures at a price equal to 100 per cent of their principal amount, plus any accrued and unpaid interest.
Ubika Research started coverage on Dealnet recently, saying the merchant banking company, with investments in a diverse group of businesses, is "highly discounted with substantial upside potential."
DealNet Capital, which was previously a company called GameCorp, restructures its investee firms through management, administration, early funding and other types of support. It pulls together cash resources from the realization of previous investments, third-party debt, related party loans and private placements.
The company continues to rebrand and restructure its business from the gaming industry to heating ventilation and air conditioning (HVAC) financing and services, water heater rentals and the business process outsourcing (NYSE:BPO) business.
Ubika analyst Vikas Ranjan noted Dealnet's strategic execution of its business plan.
The business model of the company includes the establishment of a BPO segment for "sustainable and predictable revenue generation", which will then be leveraged to enter the North American HVAC financing and servicing market, as well as the water heater rental business.
"The company has successfully established its BPO segment and is currently building capabilities in HVAC financing and servicing," Ranjan said in his note.
In executing its business plan, in May of this year, Dealnet acquired OC Communications Group, a BPO, and integrated it under the brand OCCGI.
The analyst noted that OCCGI is an "established player in the BPO industry, generating robust, recurring and predictable profits."
He added that the BPO segment will also provide a "concrete base" for the company to establish its One Dealer business in the North American HVAC and water heater financing industry, by providing customer care services and automation technology.
The company, through One Dealer, plans to bring together more than 80,000 small and intermediate-sized dealers in the North American HVAC and water heater rental industry under one umbrella.
One Dealer is expected to help these dealers reach out to end customers through OCCGI, and at the same time "authorize and encourage them to sell Dealnet's finance products and services." The company plans to position itself between the dealers and the end customers, earning profit from both.
In September, DealNet also announced the planned acquisition of an Atlanta-based home services company. It said it continues to do its due diligence on the acquisition target, with both parties working together to close the deal.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.