Shares of ALJ Regional Holdings Inc. (ALJJ) were trending upward as of the last check in after-hours trading, rising 0.54% to $1.85. ALJJ stock closed the regular session at $1.84, up 8.88% or $0.15. ALJJ stock fluctuated between $1.72 and $2.16 during the day. There were 1.59 million shares exchanged, exceeding the ALJJ’s daily volume of 0.11 million within the past 50 days and its volume 0.79 million in the year.
ALJJ stock has retreated 296.12% in the past year, and it has gained 26.90% in the last week. The stock has gained 78.64% in the last six months, and 26.90% in the last three months. Price of ALJJ stock continues to surge after term loans were replaced and financings were amended.
How did ALJJ come to amend its financings?
ALJ Regional Holdings is the parent company of Faneuil, Inc. and Phoenix Color Corp. Faneuil provides call center and back-office operations, key personnel services, and toll collection services to businesses and governments throughout the US. Meanwhile, ALJJ’s Phoenix division produces value-added components, highly illustrated books, and special-purpose products made from a diverse range of materials and decorative technologies.
ALJJ announced yesterday that it has restructured its revolving credit facility and replaced its existing term loan.
Highlights of key transaction:
- Through its newly refinanced revolving credit facility and new term loan (collectively referred to as “New Debt”), ALJJ has reduced its amortization payments on its term loan by 54%, significantly improving it’s liquidity and its operational flexibility.
- The revolving credit facility will have a lower interest rate and the convertible debt will be diluted less.
- With the new term loan, ALJJ will have the option of paying interest in cash on the outstanding convertible debt rather than pay “interest in kind,” which could have diluted shareholders further.
- Furthermore, the average interest rate of the amended revolving credit facility has been lowered by more than 50%, while the total availability remains at $32.5 million.
- Through ALJJ’s New Debt, most existing equipment leases and financing arrangements have been consolidated into one new credit facility, which will improve cash flow in the near future.
- Based on projected results of operations, new debt covenants are reset to allow for adequate cushioning.
- ALJJ’s New Debt will mature in June 2025 instead of November 2023.
What impact will this financial restructuring have on ALJJ?
ALJJ will be able to refinance its capital structure with improved financial results. Moreover, ALJJ will also be able to strengthen its liquidity and improve cash flow, which will allow it to focus more on growth.
