XpresSpa announces debt, equity transactions to improve capital structure
XpresSpa Group announced that it has improved its capital structure and strengthened its financial condition through a series of debt and equity transactions. This new round of funding provides the Company the necessary working capital for operations, new initiatives to improve the business and capital to continue to renovate spas and build five new spas by the end of 2019. The Company recently eliminated over $2.3M of secured convertible notes due November 17, 2019 pursuant to an agreement by which the notes were converted into an aggregate of 942,432 shares of underlying common stock at a conversion price equal to $2.48 per share. B3D, LLC, XpresSpa's senior secured lender, has agreed to amend the Company's $6.5M senior secured note. The amendment extends the senior secured note's maturity by 17 months to May 31, 2021, increases the principal amount by $0.5M, reduces the interest rate from 11.24% to 9.00%, provides the Company the option to conserve cash and pay interest in common stock and, subject to Shareholder Approval, the entire principal amount due of the senior secured note will be convertible into shares of common stock at a conversion price of $2.00 per share. This amendment will enable the Company to deploy more capital to operations and eliminate its obligation to pay down or refinance the current principal amount of $6.5M by December 31, 2019. The Company recently received a second capital infusion from Calm.com, Inc. of $2.5M in 5.00% unsecured convertible notes due May 31, 2022. The outstanding principal balance of the Calm Note will be convertible at Calm's option into shares of Series E Preferred Stock at a conversion price equal to $3.10 per share. In addition, Calm was issued warrants to purchase 937,500 shares of common stock which are exercisable beginning six months from the time of issuance, have a term of five years, and feature an exercise price of $2.00 per share. In addition, on July 8, 2019, holders constituting a majority of the outstanding shares of Series D Preferred Stock agreed to convert approximately $24 million of the Series D 9% Convertible Preferred Stock into shares of common stock at a price of $2.00 per share, subject to Shareholder Approval. The conversion of the Series D Preferred Stock creates a more simplified capital structure, aligns the holders of the Series D Preferred Stock with the common shareholders and removes the dilutive uncertainty associated with the Series D Preferred Stock when it automatically converted into common stock at maturity at the then current market price. Finally, the Company entered into an amendment with the investors to its May 2018 Securities Purchase Agreement to provide for, among other provisions, the waiver of certain provisions regarding restrictions on subsequent equity sales and participation in subsequent financings, and the removal of certain such provisions upon receipt of Shareholder Approval, the amendment to certain provisions of the Class A Warrants issued pursuant to the May 2018 SPA to reduce the exercise price of the Class A Warrants issuable pursuant to anti-dilution price protection contained in such Class A Warrants to $2.00 per share with respect to a limited number of Class A Warrants and to $2.00 per share with respect to the remainder Class A Warrants following receipt of Shareholder Approval, the cancellation of all outstanding Class B Warrants and the establishment of a new class of preferred stock, to be designated Series F Convertible Preferred Stock and the issuance of 9,000 shares of such Series F Preferred Stock to the parties to the May 2018 SPA Amendment, which will be convertible into common stock upon receipt of Shareholder Approval.