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Replies to post #234109 on 1812 Brewing Company Inc (KEGS)
THall
04/20/23 12:35 PM
#234110 RE: guitartrader #234109
As previously announced, the Company has been in discussions with its two convertible debenture (“CD”) holders and a third-party Trillium Partners LP (“Trillium”) to restructure and eventually eliminate convertible debt, plus accrued interest, that totaled $13,712,779 as of the period ended June 30, 2022. Ultimately, Trillium and the CD holders entered into an agreement to transfer this debt to Trillium. As part of the Company’s plan, on October 17, 2022, the Company entered into a Settlement Agreement and Stipulation with Trillium (“Settlement Agreement”), subject to court review and approval, whereby the Company agreed to issue shares of common stock to Trillium pursuant to the Section 3 (a) 10 exemption at a discount of 35% to the market price (versus a 50% discount that the Company was contractually obliged with the former Convertible Noteholders). Full satisfaction of the Settlement Agreement would discharge the Company’s convertible debenture liabilities for $8,486,342 of proceeds to the former CD holders, which represents a reduction of approximately $5 million (or approximately 37% of the outstanding obligations) to the original CD holders. The District Court of Maryland conducted a fairness hearing on October 25, 2022 and approved the Settlement Agreement. Elimination of this debt is a top priority for the Company. In 2020 and 2021 alone, the accrued interest on these CDs generated interest expense of $1.9 million. The Settlement Agreement temporarily caps the CD obligations by staying further interest accrual, and if satisfied in full, the Settlement Agreement will satisfy the obligations altogether. The Company plans to exercise with care the satisfaction of the CD obligations, in gradual tranches over time. To date, Trillium has repaid approximately $500,000 of the balance of the note with shares of common stock of the Company having been issued or approved in the aggregate amount of 808,595,000.