Newly appointed brass at ECIG is moving quickly to put the company's financial house in order, and to make it clear to the investing public that things are on the up and up. The firm's restructuring activities include revising the terms on its whopping debt obligations, and finding the working capital for a continuation of the growth plans that have dazzled the industry for the past year.
Eighty-five percent of the senior shareholders have agreed to extend their notes for 18 months, at an interest rate that will be reduced to 8%. They will also allow their conversion price to be affixed, and eliminate the ratchet provision their warrants currently have.
This seems to imply confidence in the company, despite the wild nose-dive of the stock price during the past half year. Indeed, existing stockholders have even agreed to provide short-term working capital to fund continued growth. Obviously they expect the company to come out on top in the end, or they wouldn't be interested in doing such a thing.
The company says that it has found sources for a longer term infusion of growth capital, and it is structuring an agreement with representatitives of these sources.
“ We are announcing today the initial steps that have improved our balance sheet, and anticipate additional steps to come,” says new DFO Phil Anderson.. “To facilitate obtaining the long-term financing that the Company is currently pursuing, ECIG intends to execute a reverse stock split, but this action does not dilute shareholders.”
In a reverse share split, the company press release explains, the number of shares owned by each stockholder will go down to a tenth of what it was previously, but the value of each share will go up by a comparable amount, so the total value of his or her shares will remain constant.
“The restructuring of the senior note holder’s debt, and the decision by them to further invest in the firm is an important first step,” says new Executive Chairman Dan O'Neill. “We have additional steps on the capital structure and balance sheet underway that are intended to provide full visibility for shareowners on how we expect to deliver superior and sustainable growth.”