Spicy Pickle Converts Preferred Stock Along With Capital Raise
Wednesday 09/23/2009 3:15 PM ET - Market Wire
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Symbol Last %Chg
SPKL 0.239 25.79%
As of 2:51 PM ET 9/24/09
Spicy Pickle Franchising, Inc. (OTCBB: SPKL), fast casual restaurant operator and franchisor under its Spicy Pickle and Bread Garden Urban Cafe brands, today announced that it completed two financing transactions. The first one was a private placement whereby the Company will issue approximately 16 million shares of its common stock and warrants to purchase an additional 8 million shares for gross proceeds of $2.1 million. The exercise of the warrants will bring additional funding to the Company when exercised. The second transaction redeemed approximately 94 shares of the outstanding Preferred Series A shares for $800,000 in cash and converted the remaining preferred shares into common stock. Approximately 308 preferred shares were converted at a rate of $1.25 per common share for which the Company issued approximately 2 million common shares. The balance of approximately 237 preferred shares were converted at a rate of $0.425 per common share for which the Company issued approximately 4.7 million common shares.
Spicy Pickle CEO Marc Geman said, "Importantly, these extremely beneficial transactions show strong belief in our company by the preferred shareholders and the participants in the equity offering. The conversions are considerably above current market and indicate confidence that our company has significant future value. In addition, the conversions eliminate a dividend paying security from our balance sheet and also eliminate provisions of the preferred securities that made additional financing extremely difficult. These transactions provide us with working capital and eliminate an overhang on the market for our stock and an obstacle to future financing.
"The number of shares issued on the conversions is only a fraction of what would have been issued if the preferred securities remained in place based on their price setting provisions. Therefore, we have saved shareholders from considerable potential dilution. It is to their credit that the preferred holders cooperated in this transaction. This gives us the best of both worlds."
Mr. Geman further stated, "With the strain of financing removed we look forward to turning our full attention to our core business which is the franchising of our Spicy Pickle and Bread Garden Urban Cafe restaurants in the U. S. and Canada and the continued development of healthy and great tasting food for our customers."
