In a recent move to restructure its debt, Velo3D Inc. (NYSE: NYSE:), a metal 3D printing technology firm, has entered into an agreement with investors to amend the terms of its senior secured notes. The agreement, which includes the issuance of warrants to purchase additional shares, aims to manage the company’s outstanding debt obligations.
On Monday, Velo3D agreed to make a cash payment of $5.5 million to redeem approximately $4.2 million of its senior secured notes due in 2026, along with accrued interest. A subsequent payment of the same amount is scheduled for April 15, 2024, to repay roughly $4.6 million of the principal amount of the notes and associated interest.
Concurrently, the company has also entered into a letter agreement with High Trail Investments ON LLC and an affiliated institutional investor. Under this agreement, Velo3D issued warrants for the purchase of over 21 million shares of its common stock.
These warrants will be exercisable 45 days after their issuance at a price of $0.4556 per share and are set to expire one year after the effective date of a resale registration statement or the initial exercise date, whichever comes later.
The investors are provided with the option to exercise the warrants either by cash payment or by reducing the outstanding principal amount under the notes. Additionally, under certain conditions, the warrants can be exercised on a cashless basis.
Velo3D has committed to registering the resale of the warrant shares with the Securities and Exchange Commission within 45 days following the issuance of the warrants. This registration is part of the company’s obligation under the letter agreement, which also includes customary representations, warranties, and indemnification obligations.
The issuance of the warrants and any subsequent issuance of warrant shares will be carried out in accordance with the exemption from securities registration provided by Section 4(a)(2) of the Securities Act of 1933 and Rule 506(b) of Regulation D.
This strategic financial maneuver by Velo3D is based on a press release statement and is aimed at optimizing the company’s debt structure while potentially diluting equity to manage its capital needs.
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