8-K: Stardust Power Secures $4.8M Convertible Debt for Lithium Refinery

Stardust Power Inc. has secured up to $15 million in senior secured convertible debt, with an initial $4 million drawdown, to fund early construction and development of its lithium refinery in Muskogee, Oklahoma.

Summary

• Stardust Power Inc. entered into a Securities Purchase Agreement with Lind Global Asset Management XIII LLC on December 23, 2025, for up to $15 million in senior secured convertible debt financing.
• The initial closing on December 23, 2025, provided gross proceeds of $4.0 million to the Company in exchange for a Senior Secured Convertible Promissory Note (the Note) with a principal amount of $4.8 million and a Common Stock Purchase Warrant (the Warrant) for approximately 419,162 shares.
• The Note is non-interest bearing, but if any amount is not paid when due or an Event of Default occurs, the outstanding principal balance will bear interest at 10% compounded annually.
• Monthly principal installment payments of $240,000 will commence 120 days from the Issuance Date, with the Company having the option to pay in cash, common stock (Repayment Shares), or a combination.
• Cash payments for monthly installments will include an additional 4% fee.
• The Note is convertible by Lind at a fixed Conversion Price of $5.837 per share, subject to anti-dilution adjustments but not below a Floor Price of $0.653.
• The Company can prepay the Note in full after the Prepayment Right Date (when Investor Shares are registered), but Lind retains the right to convert up to one-third of the amounts owing.
• The financing is secured by all assets of the Company and its subsidiaries through a Security Agreement, Pledge Agreement, Subsidiary Guarantee, and Guarantor Security Agreement.
• Proceeds from the financing are designated for general corporate purposes, early design and engineering services, infrastructure improvement, and procurement activities for the Muskogee, Oklahoma project.
• The Company has committed to filing a registration statement for the resale of Repayment Shares and Warrant Shares within 45 days of closing, aiming for effectiveness within 90 days, with penalties for delays.

Sentiment

Score: 7

Explanation: The financing provides critical capital for a strategic project, indicating progress and investor confidence in the company's long-term vision. However, the convertible nature of the debt and warrants introduces potential for future dilution, and the secured nature of the debt places a significant lien on company assets, which are common considerations in early-stage project financing.

Positives

• Secured $4.0 million in immediate gross proceeds, with access to up to $15.0 million in total financing, providing crucial capital for project advancement.
• The Senior Secured Convertible Promissory Note is initially non-interest bearing, reducing immediate debt servicing costs.
• The Company has flexibility in making monthly principal payments in cash, common stock, or a combination, allowing for capital management based on liquidity.
• The financing is intended to support early-stage construction activities for the Muskogee lithium refinery, a key strategic project.
• Management views this facility as bridge financing, aiming for asset-level equity and debt for construction to minimize public equity dilution and maximize shareholder value.

Negatives

• The principal amount of the Note ($4.8 million) is higher than the initial gross proceeds received ($4.0 million), implying a discount or upfront fee.
• The Note and Warrants introduce potential for significant equity dilution if converted or exercised, especially if the stock price is low.
• The financing is senior secured by all assets of the Company and its subsidiaries, limiting future financing flexibility and increasing risk for other creditors.
• Strict covenants and numerous events of default (e.g., failure to pay, breach of agreements, delisting, market capitalization falling below $15 million for 10 consecutive days) could trigger acceleration of obligations.
• The Company faces penalties (Registration Delay Payments) if it fails to timely file or maintain the effectiveness of the registration statement for Investor Shares.

Risks

• Potential for significant equity dilution if the Note is converted and Warrants are exercised, especially if the stock price declines, impacting existing shareholders.
• The Company's market capitalization falling below $15,000,000 for ten consecutive days constitutes an Event of Default, which could trigger acceleration of the Note.
• Failure to obtain Shareholder Approval for issuing shares in excess of the Nasdaq 19.99% Cap by the first anniversary of the Issuance Date would require the Company to repay the remaining outstanding balance of the Note in cash at the Holder's request.
• The Company is prohibited from entering into certain 'Prohibited Transactions' (e.g., variable-priced securities) without the Investor's consent, which could restrict future financing options.
• The Company's ability to make monthly payments in Repayment Shares is contingent on those shares being immediately resalable under Rule 144 or registered for resale, posing a risk if registration is delayed or market conditions are unfavorable.
• The Company's obligations are senior to all other existing indebtedness and equity, potentially making it harder to secure future financing that is not subordinated.

Future Outlook

The financing is intended to support near-term development activities and serve as bridge financing as the Company progresses toward project-level construction financing. Stardust Power plans to fund the construction of its 50,000 metric ton per annum lithium refinery in Muskogee, Oklahoma, through a combination of asset-level equity and asset-level debt financing, aiming to minimize public equity dilution and maximize shareholder value.

Management Comments

• "This facility marks an important step as we prepare for construction and provides optionality and meaningful flexibility as we execute the next phase of the Muskogee project."
• "We are building a robust capital stack with flexibility and shareholder value in mind and are focused on keeping our capital structure aligned with upcoming project milestones."

Industry Context

This financing positions Stardust Power to advance its battery-grade lithium carbonate refinery project, aligning with broader industry trends focused on bolstering America's energy security and establishing resilient supply chains for critical battery materials. The development of domestic lithium refining capacity is crucial for the electric vehicle and renewable energy sectors.

Corporate Governance

Stakeholder Impact

• Shareholders: Face potential dilution from the conversion of the Note and exercise of Warrants, but benefit from the financing enabling the advancement of a key strategic project. The company's stated goal is to minimize public equity dilution for construction financing.
• Creditors (Lind Global Asset Management XIII LLC): Benefit from a senior secured position on all company assets and subsidiaries, providing strong protection for their investment.
• Employees: The financing supports ongoing operations and project development, contributing to job security and potential growth opportunities.
• Customers and Suppliers: Advancement of the Muskogee refinery project could lead to future business opportunities and a more secure domestic supply chain for battery-grade lithium carbonate.
• Local Community (Muskogee, Oklahoma): The project's progression implies future economic activity, job creation, and local investment.

Next Steps

• Advance detailed engineering, infrastructure, and procurement activities for the Muskogee lithium refinery project.
• File a registration statement with the SEC for the resale of Repayment Shares and Warrant Shares within 45 days of the closing.
• Cause the registration statement to become effective within 90 days after the closing.
• Seek Shareholder Approval at the next annual meeting (and every four months thereafter if needed) to issue shares in excess of the Nasdaq 19.99% Cap.
• Pursue project-level construction financing, potentially through a combination of asset-level equity and debt.

Key Dates

Recommendation

The financing provides crucial capital for Stardust Power's strategic lithium refinery project, which is a positive development for its long-term prospects. However, the convertible nature of the debt and warrants introduces potential for significant equity dilution, and the senior secured position on all assets creates a high priority for this debt. A seasoned investor would likely 'hold' to monitor the company's execution of the Muskogee project, its ability to secure further project-level financing with minimal public equity dilution, and the impact of potential conversions on the stock's valuation before making a more definitive investment decision.

Keywords

Lithium, Battery-grade, Refinery, Muskogee, Oklahoma, Convertible Debt, Secured Note, Warrants, Capital Raise, Project Finance, Stardust Power, SDST, SEC Filing