Zoltek Cos. Inc. has received $20 million in financing in private placement from institutional investors, it said Wednesday.

The carbon fiber maker said it planned to use about $6 million of the proceeds to pay down existing high-interest mortgage debt and the rest to support its expansion plans.

The convertible debt package matures in August 2008 and has a variable interest rate. The notes are convertible into Zoltek stock at a price of $20 per share.

In addition, Zoltek (NASDAQ: ZOLT) will issue the investors four-year warrants to buy 457,143 shares of Zoltek stock at $17.50 per share, which would bring in another $8 million.

Late Wednesday, Zoltek said it lost $3.5 million in its first quarter, a narrower loss from $3.7 million in the prior year's quarter. The company attributed the loss to a $400,000 loss from discontinued operations and a $900,000 non-cash expense to amortize warrants.

Revenue for the quarter was $13.5 million, up 65 percent from the prior year's quarter, boosted by a 170 percent increase in sales in its carbon fiber unit.