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Thursday, February 2, 2023

Is There Anything Dragging The Tuesday Morning Corp (TUEM) Stock Premarket Today?

Tuesday Morning Corporation (TUEM) shares are down 19.04% at $0.2279 as of the last check, despite having entered into a debt financing agreement. The stock closed the last session at $0.28, down -7.61% or $0.02.

What agreement has TUEM entered into?

The Tuesday Morning Corp (TUEM) announced today that it has secured $32 million in convertible debt financing. The financing is has come through a special purpose vehicle (SPV) formed by the Retail Ecommerce Ventures LLC (“REV”). A further $3 million in convertible debt financing will be provided by members of TUEM’s management team, including Chief Executive Officer Fred Hand.

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As a result of the parties’ investments (collectively, the Transaction), TUEM’s balance sheet is expected to strengthen and it will be able to start executing its omnichannel strategy, which will include a digital activation and an ecommerce presence to complement its store network. As part of the Transaction, the following provisions are also included:

  • In addition to REV’s fulfillment network and infrastructure, Tuesday Morning will benefit from its e-commerce, technology, and technology-driven capabilities;
  • A new license agreement will allow TUEM to sell Pier 1 products;
  • There will be a reconstituted board of directors (the “Board”), with REV and its subsidiary Ayon being represented by their designees.

Financial Terms of the Transaction

  • By virtue of the Transaction, the SPV has acquired FILO C Term Loan Notes due December 31, 2027 in an aggregate principal amount of $7.5 million.
  • The portfolio includes exchangeable junior secured notes with a principal amount of $24,5 million due December 31, 2027.
  • During the transaction, members of the management team will purchase securities worth $3.0 million.
  • It is anticipated that the proceeds of the Transaction will provide liquidity to the Company while also repaying a portion of Tuesday Morning’s outstanding “first in last out” term loans and a portion of Tuesday Morning’s borrowings under its ABL revolving credit facility.
  • Additionally, the closing costs of the Transaction will be paid out with the proceeds.
  • The Convertible Notes and FILO C Term Loan Notes referred to collectively as the “Convertible Debt” are convertible into common stock shares.
  • Those shares will be converted at a price of $0.077 per share, resulting in approximately 454,545,454. Approximately 90 million shares of common stock can be exchanged for a portion of the convertible debt.

How does TUEM view the transaction?

Thanks to this milestone transaction, Tuesday Morning will be better positioned financially and will have sufficient liquidity to achieve its strategic goals. This will also help TUEM ensure strong relationships with partners and enhance customer offerings.

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