Celsius Holdings Inc., maker of the leading global fitness drink, Celsius, announced that the company has entered into convertible loan agreements with its affiliates Charmnew Limited, Grieg International Limited and CD Financial, LLC, its largest shareholder, for the issuance of an aggregate of $10 million in principal amount of unsecured convertible notes due December 2020.
The principal amount of the loan with CD Financial is $5 million and replaces an existing $3.5 million credit facility between the company and CD Financial, netting additional proceeds of $1.5 million. The principal amount of the loans with Charmnew and Grieg are $3.0 million and $2.0 million, respectively and represent new capital. Celsius intends to use the aggregate of $6.5 millionof net proceeds from the loans for working capital purposes in support of the ongoing expansion of its operations.
The convertible notes bear interest at a rate of 5 percent per annum, payable semi-annually, and mature two years from the effective date of each note. Holders of the notes each have the option, on or prior to the maturity date, to convert the entire principal amount and all accrued but unpaid interest on the notes into shares of Celsius’ common stock at a conversion price equal to the average closing price for our shares during the 10 business days prior to the loan finding date, less a discount of 10 percent. Prepayment of a note requires prior written consent from the lender.
“The continued excitement and investment by our strategic partners and largest shareholders, reinforces their support of Celsius, along with our progress and achievements throughout 2018 and the continued momentum the company is positioned for going forward. Their financial support has provided Celsius the growth capital needed at strategic times in the past without the need to utilize more dilutive open market funding transactions and today’s announcement further solidifies our ongoing partnership,” commented John Fieldly, president and chief executive officer. “The additional capital provides Celsius sufficient resources to execute our current 2019 operating plans given our proven ability to achieve continued record sales growth at a cash flow breakeven level in North America and Europe. Moreover, we have completed the initial capital-intensive launch of our product line in China and while we will continue to have expenditures for ongoing marketing initiatives, we will evaluate different ‘going to market models’ to allow us to achieve the best ROI for our shareholders, as we expand throughout this important market for Celsius.”
In addition, the company also announced that while it has no present intention to undertake any additional financing initiatives, in order to facilitate future long-term financings, Celsius has filed a shelf registration statement on Form S-3 with the Securities and Exchange Commission to register the potential offer and sale to the public, from time to time in one or more offerings, of an indeterminate number of shares of its common stock, preferred stock, debt securities, rights and warrants up to a total aggregate offering amount of $50 million.
