Eastside Distilling (NASDAQ:EAST) stock is taking a beating on Wednesday after the company revealed plans to trade debt for equity.
The company says that it has signed a non-binding term sheet with key first and second-lien debt holders. If this agreement is completed, it would exchange $6.2 million of debt for equity at a rate between $4 per share and $4.80 per share.
Eastside Distilling notes that this agreement would see it issue equity that is now more than 20% of total voting stock. It also mentions that the new equity would be in the form of new non-voting convertible preferred stock.
To go along with all of this, the deal would restructure Eastside Distilling’s remaining debt. That includes changes to interest payments on that debt, as well as extending maturity dates for some of it too.
What This Means for EAST Stock
Eastside Distilling notes that this agreement does more than just covert some of its debt to equity. It will also see the company regain compliance with Nasdaq listing rules. The company is currently in violation of the Shareholders Equity Rule, which this would take care of. It also says that it regained compliance with the exchange’s minimum bidding requirement.
Geoffrey Gwin, CEO of Eastside Distilling, said the following about the news:
“I am very pleased with the Company’s improvements in the quarter and also that our key strategic partners are acknowledging these improvements with their willingness to consider this debt for equity transaction.”
EAST stock is down 24.7% as of Wednesday morning.
Investors can find more of the most recent stock market news ready to go below!
We’ve got all of the hottest stock market coverage traders need to know about on Wednesday. A few examples include why shares of Inventiva (NASDAQ:IVA) and NightHawk Biosciences (NYSEMKT:NHWK) stock are rising, as well as the biggest pre-market stock movers this morning. You can find all of that at the following links!
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On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
