Tupperware (NYSE:TUP) stock is soaring more than 40% higher after the company announced that it had entered into a debt restructuring agreement with its lenders. Among other changes, the agreement calls for a maturity extension of $348 million in principal and reallocated interest and fees to 2027 with paid-in-kind (PIK) interest, the reduction or reallocation of $150 million in cash interest and fees, a 2025 amortization payment reduction of $55 million and instant access to a $21 million revolving line of credit.
“I am confident that this agreement provides us with the financial flexibility to continue executing on our near-term turnaround efforts as well as our long-term strategy to create a global omnichannel consumer brand,” said Chief Financial Officer Mariela Matute. “We are committed to making ongoing progress in improving liquidity and strengthening our capital structure.”
TUP Stock: Tupperware Announces Debt Restructure, Delayed Earnings
However, Tupperware’s lenders will gain as well, essentially at the expense of shareholders. As part of the debt restructuring agreement, the lenders received warrants exercisable for 2.54 million shares, representing 4.99% of total issued and outstanding TUP stock. These warrants carry an exercise price of just 1 cent.
Warrants representing 2.99% of shares issued and outstanding will be immediately exercisable while the remainder will be exercisable upon the completion of specific “Repayment Incentive Milestones.” Tupperware has also agreed to register a resale for the warrants and the resulting shares within 30 days of becoming current with its U.S. Securities and Exchange Commission (SEC) reporting obligations.
In addition, Tupperware will also have to cough up $16.25 million in restructuring fees. This fee carries a deadline of July 31, 2025 that is subject to change upon events such as a bankruptcy. On top of that, the home goods company is also subject to a $10 million facility fee with a contingent deadline as well. The facility fee has the possibility of being waived partially or in full upon the completion of certain events, such as a repayment in full of Term A Loans.
Meanwhile, Tupperware also announced that it is unable to file its earnings for the quarter ended July 1 because it was too busy working on its 2022 10-K and earnings report for the quarter ended April 1. This is an extremely bad look for the company, although many shareholders seem to be enveloped in Tupperware’s meme stock status instead.
On the date of publication, Eddie Pan did not hold (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.
