LEHI, Utah – Purple Innovation has refinanced its debt by consolidating an outstanding loan with its largest shareholder that made a bid in 2022 to buy and take the company private.
Under the new $61 million financing deal with Coliseum Capital Management and No Street Capital, the two financial backers have assumed Purple’s two primary outstanding debt lines.
At closing of the financing, the facilities will be consolidated into a new, upsized term loan of $61 million with about $21 million of available capital, after expenses; a payment-in-kind interest option; and an additional incremental loan up to $19 million subject to agreement by the lending parties.
The company said the refinancing provides Purple with “a stronger balance sheet and ongoing cash to invest in its business.”
Prior to the transaction, Purple said its net liquidity was about $26 million. Under the new agreement, cash and cash equivalents are about $48 million.
The new loan, the company said, eliminates “restrictions and requirements customarily associated with an ABL credit agreement.” As part of the new financing agreement, Purple issued warrants to the lenders to purchase 20 million shares of the company’s Class A common stock at a price of $1.50 per share, subject to certain adjustments.
In the fall of 2022, Coliseum Capital Management offered to acquire all outstanding stock it didn’t already own for $.4.35 a share. At the time, it held 45% of Purple’s stock. Today, Purple’s stock closed at $0.82 per share. News of the financing, after the market closed at 4 p.m. Eastern, gave the company’s stock a 12% lift in early after-hours trading.
Purple’s board of directors rebuked the offer and adopted a shareholder rights plan. Coliseum Capital came back in February and nominated a new slate of board members, and the company created a new shareholder dividend with a “ proportional representation preferred linked stock” to prevent Coliseum from hijacking the board. Coliseum responded with a lawsuit against the company saying the new stock prevented shareholders of a fair election of directors.
Purple and Coliseum established a seven-point agreement in April.
“We believe the Company is positioned to grow revenue in 2024, despite challenging industry conditions, and with specific cost saving initiatives under way, we also expect incremental improvements in EBITDA and cash flow. We are confident that with continued, focused execution by our team and a considerably strengthened capital structure, we are well positioned to lean into our growth initiatives and continue to take market share. We look forward to sharing more specific insight into our 2024 expectations on the fourth quarter earnings call.”