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Secaucus, NJ-based Children’s Place, Inc. (NASDAQ:PLCE), a prominent family clothing retailer facing significant financial challenges with a debt burden of $702 million, has successfully finalized an oversubscribed rights offering, as stated in a recent SEC filing. According to InvestingPro data, the company’s stock has shown remarkable resilience with a 57% gain over the past six months, despite operating with negative free cash flow. The company, which began the offering on December 31, 2024, offered existing shareholders non-transferable subscription rights to purchase up to 9,230,769 shares of its common stock.
Shareholders as of December 13, 2024, were eligible to participate in the offering, which included a basic subscription right and an over-subscription privilege. The basic subscription allowed shareholders to purchase 0.7220 shares of common stock per right at $9.75 per share, while the over-subscription privilege enabled them to subscribe for additional shares that remained unsubscribed at the same price, subject to certain adjustments and allocations.
The subscription period concluded at 5:00 p.m., New York City time, on January 31, 2025, with total demand reaching 12,117,812 shares, indicating strong interest from rights holders. The strong demand comes as InvestingPro analysis shows the company trading near its Fair Value, with analysts projecting a return to profitability this year despite current challenges. InvestingPro subscribers have access to 12 additional key insights about PLCE’s financial health and market position. The company confirmed that 7,368,689 shares were acquired through basic subscription rights, and an additional 1,862,080 shares were allocated under the over-subscription privilege, rounding up the total issued shares to 9,230,769 at the subscription price of $9.75 per share.
Mithaq Capital SPC and Snowball Compounding Ltd., two significant shareholders, fully exercised their basic subscription rights. Mithaq also sought additional shares through the over-subscription privilege, which were subject to pro rata allocations. Snowball paid for its shares entirely in cash, while Mithaq partially paid in cash and the remainder by delivering a portion of the company’s indebtedness owed to them.
The rights offering generated approximately $29.8 million in gross cash proceeds for Children’s Place. In accordance with the company’s credit agreement, they plan to retain 20% for general corporate purposes and use the remaining 80% to prepay revolving credit facility debts.
As of February 5, 2025, the company had 12,784,972 shares outstanding, not including those issued in the rights offering. Post-offering, Mithaq is believed to own approximately 62.2% of the company’s common stock. With a current market capitalization of $147.3 million and an EBITDA of $22.5 million in the last twelve months, the company faces significant challenges, as evidenced by its weak overall financial health score on InvestingPro. Investors seeking deeper insights into retail sector opportunities can access comprehensive financial metrics and expert analysis through InvestingPro’s advanced screening tools.
The rights offering was conducted under the company’s Form S-1 registration statement with the SEC, effective December 31, 2024. This report, based on the press release statement, does not constitute an offer to sell or a solicitation of an offer to buy any securities.
In other recent news, The Children’s Place, Inc. reported third-quarter earnings and revenues that did not meet analyst expectations. The company posted adjusted earnings per share of $2.04, compared to the estimated $2.86, and revenue of $390.2 million, significantly lower than the anticipated $442.07 million. Despite a decrease in net sales by 18.8% to $390.2 million, the company saw an improvement in gross profit margin by 180 basis points to 35.5%, attributed to reduced product input and supply chain costs.
The Children’s Place also managed to cut down adjusted selling, general and administrative expenses by $9.1 million compared to the previous year. The company’s President and Interim CEO, Muhammad Umair, expressed a commitment to improving the profitability of the business and laying a foundation for future growth. The company maintained a total liquidity of $94 million at the end of the quarter and opened its first new Gymboree store in over two years early in the fourth quarter. These are among the recent developments that highlight the company’s strategic efforts despite the revenue and earnings miss.
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