CompoSecure issues 3.6 million shares as earn-out consideration

CompoSecure, Inc. (NASDAQ:CMPO), a financial services company specializing in crypto assets, has issued 3.6 million shares of Class A common stock as part of an earn-out consideration related to its business combination completed on December 27, 2021.

This issuance was triggered by the company's stock achieving a volume-weighted average price of $15.00 per share, meeting the specified threshold before the third anniversary of the business combination. The milestone comes amid an impressive year for CompoSecure, with InvestingPro data showing a remarkable 213% year-to-date return and a market capitalization of $1.39 billion.

The transaction, detailed in a recent 8-K filing with the Securities and Exchange Commission, represents a key milestone stemming from the original Merger Agreement. Under this agreement, certain parties were entitled to additional shares of CompoSecure if specific stock price targets were met within designated timeframes post-merger.

CompoSecure's earn-out provision was designed to align the interests of the merging entities and their stakeholders by setting performance-based incentives. The achievement of this stock price target, resulting in the issuance of additional shares, reflects a positive development for the company and its investors.

The shares were officially issued on Tuesday, December 17, 2024, as part of the company's commitment outlined in the Merger Agreement. CompoSecure, headquartered in Somerset, New Jersey, has not disclosed the identities of the recipients of the new shares.

This event is a significant one for CompoSecure, which operates under the SIC code for Finance Services and was formerly known as Roman DBDR Tech Acquisition Corp. before changing its name on September 1, 2020. The company's common stock and warrants are listed on the Nasdaq Global Market under the tickers CMPO and CMPOW, respectively.

In other recent news, CompoSecure, a finance services provider, has made significant strides in its corporate structure and financial performance. The company recently completed an exchange of $130 million notes for stock, resulting in the issuance of additional shares and an optimized capital structure. This move aligns with the company's strategy to reduce debt and improve shareholder value.

Furthermore, CompoSecure eliminated its dual-class structure through a transaction that exchanged Class B Units for shares of Class A Common Stock. This strategic decision established a single-class equity structure, enabling a more streamlined operational framework.

On the financial front, the company reported a notable 11% increase in net sales, amounting to $107.1 million for the third quarter of 2024. Additionally, CompoSecure observed a 13% rise in adjusted EBITDA, totaling $40 million, despite reporting a GAAP net loss of $26 million due to non-cash adjustments.

In light of these developments, B.Riley financial analysts have upgraded their price target on CompoSecure shares to $23.00, maintaining a Buy rating. This adjustment reflects the company's growth potential, particularly following the recent appointment of Dave Cote as Executive Chairman.

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