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Roadzen Inc., an insurance brokerage services company with a market capitalization of $77.16 million, has entered into a securities purchase agreement with an institutional investor, leading to the issuance of junior convertible notes totaling $2.3 million. The transaction was reported on Tuesday. According to InvestingPro analysis, the company currently shows signs of financial stress with a weak health score, though its stock appears undervalued based on Fair Value calculations.
The notes, which were sold for $2 million before fees and expenses, carry an interest rate of 16% per annum, increasing to 18% in the event of a default. They are set to mature one year from the issuance date and are convertible into ordinary shares of the company at a conversion price of $2.00, subject to customary adjustments. This financing comes as the company faces liquidity challenges, with InvestingPro data showing a concerning current ratio of 0.42, indicating short-term obligations exceed liquid assets.
The agreement includes a provision that limits the investor’s ownership to 4.99% of Roadzen’s outstanding ordinary shares, which can be increased to a maximum of 9.99% upon 61 days’ notice.
In case of default, investors have the right to require redemption of the notes or convert them at a defined conversion price. The company also cannot enter into a fundamental transaction without the successor entity assuming obligations or redeeming the notes in full.
Additionally, the company has the option to redeem the notes at any time with a five-day notice by paying the principal, accrued interest, and additional interest through the maturity date.
ThinkEquity LLC acted as the placement agent for the offering, earning a fee of 3.5% of the gross proceeds. The notes and underlying ordinary shares were offered pursuant to a prospectus supplement to the company’s registration statement, which became effective on November 12, 2024.
Roadzen has engaged Maples & Calder as legal counsel, whose opinion regarding the validity of the securities issued is included as an exhibit in the SEC filing. This offering may not constitute an offer to sell or a solicitation of an offer to buy in jurisdictions where such actions would be unlawful prior to registration or qualification under the securities laws.
This financial move is based on a press release statement and is intended to provide Roadzen with additional capital for its business operations. The company’s stock, which has declined 52.29% year-to-date and currently trades at $1.18, is listed on The Nasdaq Stock Market under the symbols RDZN for ordinary shares and RDZNW for warrants. InvestingPro subscribers have access to over 10 additional key insights and extensive financial metrics that could help evaluate the company’s future prospects.
In other recent news, Roadzen Inc. has been making significant strides in the financial and technological sectors. The company has reduced its short-term liabilities by $5.5 million through a cash settlement, part of a broader initiative that has cut liabilities by $12.6 million. Additionally, Roadzen has extended its senior secured debt facility to December 31, 2025, and raised $7.88 million through public equity offerings. In a move to bolster its market presence, Roadzen secured a patent in India for its driver risk assessment technology, the CARD system, which has been validated under India’s AIS 184 standard. The company also renewed a contract with India’s largest general insurer to manage its Roadside Assistance program, continuing a partnership that began in 2021. Roadzen’s DrivebuddyAI platform is set to capitalize on upcoming road safety regulations in India, potentially generating a $200 million annual revenue stream. Furthermore, Roadzen amended its Senior Secured Note Purchase Agreement, extending the maturity date of its notes and issuing a new warrant for additional shares. These developments underscore Roadzen’s efforts to enhance its financial flexibility and market positioning.
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