meal kit supplier blue apron (NYSE: APRN) had a good week on Wall Street: shares of the company rose nearly 8%, according to S&P Global Market Intelligence. Investors were particularly encouraged by some positive funding news from the company.
On Monday, Blue Apron kicked off the week on a high note by announcing a pair of measures that will improve the company’s finances.
These will take the form of two “capitalisation events”. The first is a $40.5 million private placement, the bulk of which ($40 million) is to be provided by RJB Partners, which is affiliated with Joseph Sandberg, a longtime investor in the company. Putting her money where she is, Blue Apron CEO Linda Findley will contribute the remaining $500,000.
The second event is the $30 million refinancing of the company’s debt. On Thursday, Blue Apron announced that it had signed a note purchase agreement with Allianz Global Investors for the latter to issue $30 million of the company’s senior secured notes that mature in 2027. will carry an annual interest rate of just under 8.9%, although this will rise to nearly 11.9% if they fail to meet certain rating requirements.
Proceeds from these securities were combined with cash to repay an existing Blue Apron senior secured loan.
“Proceeds from completed transactions and expected additional debt and equity financing support our continued turnaround as we move toward long-term sustainable and profitable growth,” Findlay said in the press release trumpeting the moves.
It will be a good trick if the food service the company can get away with it. While this benefited somewhat when consumers were largely stuck at home during the worst of the pandemic, low barriers to entry into the meal kit space favored a slew of competitors. This has hampered Blue Apron’s growth and consistently pushed it into the red on the bottom line. Shareholders hope that these new financing moves can help reverse the situation.
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