Street Calls of the Week
Investing.com -- Quantum Corporation (NASDAQ:QMCO) stock jumped 6.8% Tuesday after the AI and unstructured data solutions provider announced a definitive agreement to restructure its outstanding term debt with Dialectic Technology SPV LLC and other lenders.
The restructuring deal will allow approximately $52 million of Dialectic term debt to be exchanged for senior secured convertible notes with a three-year maturity. The agreement eliminates existing requirements that capital raised through the company’s Standby Equity Purchase Agreement (SEPA) be used to repay the existing term loan.
Under the terms of the transaction, Quantum will be able to retain up to an additional $15 million of SEPA proceeds for working capital and general corporate purposes. The company has also eliminated existing leverage and minimum liquidity covenants, while issuing Dialectic a warrant to purchase 2,653,308 shares of common stock as consideration.
"This transaction to restructure a substantial portion of the Company’s outstanding term debt represents a significant step toward our goal of becoming debt-free," said Hugues Meyrath, CEO of Quantum. "The proposed exchange of term debt for convertible notes demonstrates Dialectic’s belief in the Company’s strategic vision and long-term growth opportunities, while also aligning Dialectic as a future strategic partner."
John Fichthorn, Managing Partner of Dialectic Capital Management, noted that the transaction is "an important milestone in Quantum’s ongoing operational and financial transformation."
The closing of certain transactions contemplated by the agreement is subject to conditions, including approval of the debt exchange by Quantum’s stockholders.
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