22nd Century (NASDAQ:) Group, Inc. (NASDAQ:XXII), a company specializing in cigarette manufacturing, announced today it has entered into an agreement that alters the terms of a previous arrangement with investment entities JGB Partners, LP, JGB Capital, LP, and JGB Capital Offshore Ltd., collectively referred to as the “Holders.”
The modification, effective today, involves a Letter Agreement to amend the Securities Purchase Agreement dated March 3, 2023, and associated debentures. This agreement allows the company, with board discretion and one-time authority, to reset the conversion price of the debentures to the average of the daily VWAPs (Volume Weighted Average Prices) for the five consecutive trading days before the reset date.
The new conversion price will not exceed the current rate of $.7458.
The adjustment to the conversion price is contingent upon shareholder approval, which the company has committed to seeking under Nasdaq regulations by no later than December 31, 2024. Should shareholder consent not be obtained by this date, the company will continue to request approval at subsequent shareholder meetings.
The information provided in this article is based on a press release statement from 22nd Century Group, Inc.
In other recent news, 22nd Century Group has successfully met the NASDAQ Capital Market’s minimum shareholders’ equity requirement, securing its continued listing on the exchange.
This was achieved through a series of strategic financial maneuvers, including issuing shares of common stock to settle subordinated debt and the sale of additional shares. The company also secured approximately $3.48 million in an equity sale involving 6.1 million shares of common stock.
In terms of business expansion, 22nd Century Group has entered into agreements to increase its manufacturing volumes by producing filtered cigar products for an existing customer and to introduce its Moonlight brand cigarettes to the Southeast Asian market.
The company also plans to extend the distribution of its VLN® cigarettes, which contain 95% less nicotine than standard cigarettes, aiming to increase its footprint to over 270,000 retail outlets nationwide.
InvestingPro Insights
The recent agreement to modify 22nd Century Group’s (NASDAQ:XXII) debt structure comes at a critical time for the company, as reflected in the latest financial data and analyst insights from InvestingPro. With a market capitalization of just $4.85 million, XXII is facing significant financial challenges. The company’s revenue for the last twelve months as of Q2 2024 stood at $19.23 million, with a concerning revenue decline of 28.49% over the same period.
InvestingPro Tips highlight that XXII “operates with a significant debt burden” and “may have trouble making interest payments on debt.” These tips are particularly relevant given the company’s recent move to adjust its debt terms, suggesting a proactive approach to managing its financial obligations in a challenging environment.
The stock’s performance has been notably poor, with InvestingPro data showing a staggering 98.27% price decline over the past year. This aligns with another InvestingPro Tip indicating that the “stock has fared poorly over the last month,” which underscores the urgency of the company’s financial restructuring efforts.
For investors seeking a more comprehensive analysis, InvestingPro offers 15 additional tips that could provide valuable insights into XXII’s financial health and market position.
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