9% series A convertible preferreds sold with warrants to TTG Apparel
By Devika Patel
Knoxville, Tenn., May 29 - Frederick's of Hollywood Group Inc. completed a $5 million private placement of 9% series A convertible preferred stock with TTG Apparel, LLC on May 23, according to an 8-K filed Tuesday with the Securities and Exchange Commission.
The preferreds are convertible into 4,761,905 common shares at $1.05 per share, which is a 337.5% premium to the May 22 closing share price of $0.24. The preferreds are redeemable at any time.
TTG Apparel also received warrants for 1.5 million shares. Of the warrants 500,000 are each exercisable at $0.45 for three years, 500,000 are each exercisable at $0.53 for five years, and 500,000 are each exercisable at $0.60 for seven years. The strike prices are 87.5%, 120.83% and 150% premiums to the May 22 closing price.
Proceeds will be used to reduce accounts payable and add about $10 million to shareholders' equity.
"The equity investment and vendor allowances are both part of our broader turnaround strategy, as these events will significantly strengthen our balance sheet and vendor relationships. As a result of these events, we are in a better position to unlock the true potential for the Frederick's of Hollywood brand and grow our business," chairman and chief executive officer Thomas Lynch said in a press release. "We are also implementing a partner-oriented approach with many of our vendors that will allow us to share the costs of promotional activity for our products. This will benefit the company and our vendors by helping push greater volume through our stores and e-commerce site, while improving our gross margins."
Frederick's is a New York-based retailer of women's intimate apparel and related products.
| Issuer: | Frederick's of Hollywood Group Inc.
|
| Issue: | Series A convertible preferred stock
|
| Amount: | $5 million
|
| Conversion price: | $1.05
|
| Conversion ratio: | Into 4,761,905 shares
|
| Dividends: | 9%
|
| Call: | Yes
|
| Warrants: | For 1.5 million shares
|
| Warrant expiration: | Three years (for 500,000 shares), five year (for 500,000 shares), seven years (for 500,000 shares)
|
| Warrant strike prices: | $0.45 (for 500,000 shares), $0.53 (for 500,000 shares), $0.60 (for 500,000 shares)
|
| Investor: | TTG Apparel, LLC
|
| Settlement date: | May 23
|
| Stock symbol: | Amex: FOH
|
| Stock price: | $0.24 at close May 22
|
| Market capitalization: | $14.4 million
|
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