Dragonfly Energy restructures term loan and issues Series B preferred stock

Dragonfly Energy Holdings Corp. (NASDAQ:DFLI), a Reno-based energy company with a market capitalization of $115.34 million, announced Monday it has entered into a sixth amendment to its term loan agreement with its lenders and Alter Domus (US) LLC as agent, restructuring its outstanding indebtedness. According to InvestingPro data, the company has been facing challenges with debt servicing, showing a weak Financial Health Score of 1.2. The announcement was made in a press release statement based on a filing with the Securities and Exchange Commission.

As part of the amendment, Dragonfly Energy prepaid $45 million of its outstanding term loan debt using proceeds from an underwritten public offering of common stock completed on Friday. The debt restructuring comes as the company’s stock has experienced significant volatility, with a 122.22% surge over the past six months despite a recent 13.38% weekly decline. The company will also issue $25 million of newly created Series B preferred stock to lenders in exchange for an equivalent amount of outstanding loan principal. The Series B preferred stock will be convertible into common stock at a price of $3.15 per share, totaling up to 7,936,508 shares, and will carry an 8% annual cash dividend and a 2% annual dividend payable in kind. Lenders have agreed not to convert the preferred stock for six months following issuance.

In connection with the prepayment, lenders have agreed to forgive $5 million of the remaining principal. The outstanding principal under the term loan agreement will be reduced to $17 million, which will carry a fixed interest rate of 12% per year, payable monthly starting December 31, 2025, and maturing in October 2027.

Dragonfly Energy also agreed to pay lenders a fee of approximately $450,000 in cash and an additional $450,000 added to the principal outstanding under the loan. Certain covenants under the loan agreement have been waived through December 31, 2026, and the company has agreed to maintain a minimum liquidity of $5 million, calculated monthly.

The Series B preferred stock and underlying common shares will be issued in a transaction exempt from registration under the Securities Act of 1933.

Dragonfly Energy Holdings Corp. is headquartered in Reno, Nevada, and its common stock and redeemable warrants are listed on the Nasdaq Capital Market under the symbols DFLI and DFLIW, respectively. For deeper insights into DFLI’s financial health and performance metrics, investors can access comprehensive analysis through InvestingPro, which offers exclusive access to 13+ key ProTips and detailed financial metrics for informed decision-making.

In other recent news, Dragonfly Energy Holdings Corp. announced the pricing of a $55.4 million public offering, which includes 36 million shares of common stock priced at $1.35 per share and pre-funded warrants for an additional 5 million shares. The company also received a patent approval for its battery communication technology from the U.S. Patent and Trademark Office. This technology enables multiple battery systems and wireless devices to share information over a connected mesh network, enhancing battery communication capabilities.

Additionally, Dragonfly Energy has collaborated with PACCAR Inc. on a whitepaper addressing lithium-powered solutions for reducing idling and fuel costs in the trucking industry. The whitepaper evaluates the performance of lithium-powered idle-reduction solutions compared to traditional diesel-powered and AGM-based alternatives, incorporating real-world fleet trial data. These developments reflect Dragonfly Energy’s ongoing efforts to innovate and expand its technological offerings in the energy storage sector.

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