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Staffing 360 Solutions, Inc. (NASDAQ:STAF), a company specializing in staffing services with a current market capitalization of $5.14 million, announced on Tuesday that it has entered into a Conversion Agreement with investment firm Jackson Investment Group, LLC. According to InvestingPro data, the company has been operating under significant debt pressure, with a debt-to-capital ratio of 89%. The agreement, effective January 22, 2025, is a strategic move aligned with the company’s ongoing merger plans with Atlantic International Corp.
Under the terms of the Conversion Agreement, all outstanding principal of the Third Amended and Restated 12% Senior Secured Note from October 27, 2022, and the 12% Senior Secured Promissory Note from August 30, 2023, collectively known as the "Jackson Notes," will be converted into approximately 5.6 million shares of newly designated Series I Preferred Stock.
This restructuring comes at a crucial time, as InvestingPro analysis shows the company’s current ratio stands at 0.32, indicating potential liquidity challenges. This conversion is in relation to the Agreement and Plan of Merger dated November 1, 2024, between Staffing 360 Solutions, Atlantic International Corp., and A36 Merger Sub Inc.
Furthermore, the agreement stipulates that if the average closing price of Atlantic’s common stock falls below $5.00 in the last five trading days before the merger’s closing, additional shares will be issued to Jackson to maintain the agreed value. The additional shares, known as Pro Rata Shares, will be subject to a lock-up period.
This conversion also includes a waiver by Jackson of all accrued and unpaid interest related to the Jackson Notes. The conversion and waiver are instrumental in progressing the merger, which is anticipated to provide significant benefits to the involved parties upon completion.
The information provided in this article is based on a press release statement and the full text of the Conversion Agreement, which can be found in the financial statements and exhibits of the company’s latest 8-K filing with the SEC. Despite recent challenges, the stock has shown strong momentum with a 48% return over the past six months. For deeper insights into STAF’s financial health and 15 additional ProTips, consider subscribing to InvestingPro.
In other recent news, Staffing 360 Solutions has been actively managing its financial situation. The staffing services company has extended its credit agreement with MidCap Funding IV Trust, providing financial flexibility despite a negative EBITDA of -$10.49 million on revenues of $176.82 million. In addition, the company has entered into a First Amendment to the Agreement and Plan of Merger with Atlantic International Corp., and A36 Merger Sub Inc., a wholly-owned subsidiary of Atlantic.
Simultaneously, Staffing 360 Solutions extended the maturity dates of certain notes. These notes, previously due in October 2024, are now due in February 2025. This extension, according to InvestingPro, is part of the company’s financial restructuring efforts to manage its significant debt burden.
In governance developments, during its annual stockholders meeting, Alicia Barker and Nicholas Florio were elected as Class II directors, and Brendan Flood as a Non-Classified director. Stockholders also ratified the appointment of RBSM LLP as the company’s independent registered public accountant for the fiscal year 2024.
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