Envoy Medical (TASE:PMCN), Inc. (NASDAQ:COCH), a medical device company specializing in orthopedic and prosthetic products, announced today that it has entered into a significant agreement that alters the rights of its security holders and affects its capital structure. This development follows a Conversion and Waiver Agreement with the company’s former sponsor, Anzu SPAC GP I LLC, which held a substantial stake in Envoy Medical’s Preferred and Common Stock.
Under the terms of the agreement, finalized today, Anzu has waived its right to receive $3.73 million in accrued dividends on its Preferred Stock holdings. In exchange, the company has lifted restrictions on 1 million shares of Anzu’s unvested Class A Common Stock, making them unrestricted and freely tradable.
Additionally, Envoy Medical agreed to a temporary reduction in the conversion price of its Preferred Stock from $11.50 to $3.63 per share, effective from today until January 20, 2025. This temporary price reduction is designed to facilitate the conversion of Preferred Stock into Common Stock at a more favorable rate for the holder. Anzu has taken advantage of this provision by converting 373,333 shares of Preferred Stock into 1,028,986 shares of Common Stock.
The agreement marks a material modification to the rights of security holders as it impacts the conversion terms of the Preferred Stock as outlined in the Certificate of Designation. The Preferred Stock, which accrues dividends at an annual rate of 12% based on a $10.00 per share original issue price, has been subject to a voluntary and temporary change in its conversion mechanics.
This strategic move by Envoy Medical follows its business combination transaction with Legacy Envoy on September 29, 2023, which was supported by Anzu. The Conversion and Waiver Agreement is an effort to streamline the company’s capital structure post-merger and to provide flexibility in its financial operations.
Envoy Medical’s management believes that this agreement will benefit the company and its shareholders by simplifying the capital structure and potentially enhancing the liquidity of its Common Stock. This news is based on a press release statement and the details of the agreement are available in the company’s SEC filing.
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