DENVER Spicy Pickle Franchising Inc., the operator and franchisor of the Spicy Pickle and Bread Garden Urban Cafe brands, completed two financing transactions last week, including a private placement of stock and the conversion of preferred stock, which together garnered the company $2.9 million.
The private placement of stock included the issuance of 16 million shares of common stock and warrants to purchase an additional 8 million shares for gross proceeds of $2.1 million. If the warrants are exercised, additional capital will be garnered by Spicy Pickle, the company said.
Aseparate transaction redeemed about 94 shares of the company’s outstanding Preferred Series A shares for about $800,000. The remaining preferred stock was converted to common stock, the company said. Spicy Pickle’s stock trades on the over-the-counter bulletin board.
About 308 preferred shares were converted at a rate of $1.25 per common share for which the Spicy Pickle issued about 2 million common shares. The balance of about 237 outstanding preferred shares were converted at a rate of 42.5 cents per common share for which Spicy Pickle issued about 4.7 million common shares. The company’s stock has traded between 14 cents per share and 47 cents per share during the past 52 weeks.
“Importantly, these extremely beneficial transactions show strong belief in our company by the preferred shareholders and the participants in the equity offering,” Marc Geman, Spicy Pickle’s chief executive, said in a statement. “These transactions provide us with working capital and eliminate an overhang on the market for our stock and an obstacle to future financing.”
Geman noted that the number of shares issued in these transactions were a fraction of what would have been issued had the preferred shares remained in place, thereby reducing future share dilution for stockholders.
Denver-based Spicy Pickle operates of franchises about 40 restaurants in 11 states. There are about 15 Bread Garden Urban Cafe locations in Canada. For its latest quarter ended June 30, the company booked $1.2 million in revenue and posted a net loss of $248,751.
Contact Sarah E. Lockyer at [email protected].