Staffing 360 Solutions Inc (NASDAQ: STAF) is making a run for the top in the market this morning, and for good reason. The company announced that it has successfully completed a debt restructuring. Here’s what’s going on:
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STAF Stock Flies on the Completion of Debt Restructuring
In the press release, Staffing 360 Solutions said that it has successfully restructured its senior secured debt agreement with Jackson Investment Group and MidCap Funding IV Trust lenders of a $25.7 million loan and a $25 million credit facility, respectively. The restructuring includes a two-year extension on the $35.7 million loan as well as an extension of the $25 million credit facility.
In a statement, Brendan Flood, Chairman and CEO at STAF, had the following to offer:
I am very pleased that we have been able to strengthen our financial position and provide considerable flexibility with this two-year extension of our existing senior debt with Jackson Investment Group. We have reduced the cash outflow related with this financing by 50% from the previous facility. We will further reduce $1 million in interest expense in the first six months and move out for two years the conversion of the preferred shares. The length of the extension period is significant as it provides us with a considerable runway in which to refinance the loan and/or our total debt prior to its maturity.
Overall business continues to improve week-over-week and we expect to be back to pre-COVID levels by the end of the year. We have applied for full forgiveness of the $19.4 million Cares Act PPP stimulus loan and are optimistic that we will be granted forgiveness. Our Company has already benefited from the many operational adjustments made, which have resulted in $5.2 million in cost savings.
We expect that, as the pandemic-related impact to our business continues to ease, Staffing 360 will gain new heights. Our ability to complete a more attractive refinancing in 2021 will provide us even greater flexibility for both organic growth and M&A-driven expansion in the future.
The Bottom Line
The bottom line here is simple. With the debt restructuring in mind, the company has strengthened its balance sheet and created a stronger financial foundation from which to grow. All in all, that’s great news, and investors are reacting by sending STAF stock for the top.
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