Quantum Corporation (NASDAQ:QMCO) saw its stock rise 6.8% Tuesday after announcing a definitive agreement to restructure its outstanding term debt with Dialectic Technology SPV LLC and other lenders.
The deal enables roughly $52 million of Dialectic term debt to be converted into senior secured convertible notes with a three-year maturity. It also removes the existing requirement that funds raised under the company’s Standby Equity Purchase Agreement (SEPA) be used to repay the current term loan.
Under the transaction terms, Quantum may retain up to $15 million of SEPA proceeds for working capital and general corporate purposes. The company has further removed leverage and minimum liquidity covenants, while issuing Dialectic a warrant to purchase 2,653,308 shares of common stock as part of the 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, added that the deal marks “an important milestone in Quantum’s ongoing operational and financial transformation.”
The closing of certain elements of the agreement is contingent on conditions, including approval of the debt exchange by Quantum’s stockholders.
Quantum Corporation stock price
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