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Loop Industries, Inc. (NASDAQ:LOOP), a Nevada-based chemical company currently valued at $58 million, announced on Wednesday it has entered into an Amended and Restated Share Purchase Agreement with Reed Management SAS.
According to InvestingPro data, the company has shown significant volatility, with its stock currently trading at $1.21, down nearly 58% year-to-date. The agreement, which amends a prior arrangement from May 30, 2024, outlines a strategic expansion into Europe through a new entity, Loop Europe.
The deal involves Loop selling and issuing shares of convertible preferred stock to Loop Europe for €10 million. This transaction will coincide with Loop Europe issuing corporate bonds to Reed for the same amount. InvestingPro analysis indicates the company's financial health score is currently rated as 'WEAK', with a current ratio of 0.48 suggesting potential liquidity challenges.
Additionally, Loop Europe will pay Loop a €10 million royalty tranche under a licensing agreement for the use of Loop's proprietary technology in a single facility with the option for one sublicense.
The closing of these transactions is contingent on customary conditions, including the completion of Loop Europe's incorporation and execution of related documents. Loop anticipates the deal to close within seven business days post the incorporation of Loop Europe.
This move represents a significant step for Loop Industries in extending its global footprint and commercializing its technology in the European market. While the company has expressed optimism about the anticipated benefits and timeline of the agreement, it also acknowledges the risks, including potential delays in the incorporation of Loop Europe or unmet closing conditions.
The information contained in this article is based on a press release statement from Loop Industries and filings with the Securities and Exchange Commission. Loop Industries has not provided any additional comments regarding the future implications of this expansion. Investors are advised to consider the company’s filings for a comprehensive understanding of the risks involved.
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