Troika Media (NASDAQ:TRKA) stock is sinking lower by more than 5% today. The company announced that it would offer up to $70 million of common stock through an at-the-market (ATM) offering. B. Riley Securities will act as the agent or principal of the offering and will be entitled to a 5% commission fee on the gross proceeds of common stock sold.
Proceeds from the offering will be used toward general corporate expenses, such as capital expenditures and working capital. Troika added that it may use a portion of the proceeds to satisfy its contingent liabilities. Additionally, it may invest in business or products that would provide synergy. As of the date of the announcement, Troika had no plans to satisfy contingent liabilities or to enact an acquisition.
TRKA Stock: Troika Announces $70 Million ATM Offering
This is not welcome news for TRKA stock holders, as it spells more dilution. The company warned that:
“If you invest in our common stock in this offering, your ownership interest may be diluted immediately to the extent of the public offering price per share exceeds the as adjusted unaudited pro forma net tangible book value per share of our common stock after this offering.”
As of May 12, there were 413.12 million shares of TRKA common stock outstanding. Troika’s market capitalization currently sits at around $70 million, the same value as its ATM offering.
Nasdaq Sends Troika Delisting Notice
Last week, the company announced that it had received a delisting notice from Nasdaq for failing to trade above $1. Troika stated that it would appeal the determination through a hearing to Nasdaq’s Hearing Panel, which will allow TRKA to remain listed for the time being. Typically, hearings are held around 30 to 45 days after a hearing request has been made. If the request was made on May 18, the day of the delisting notice announcement, that means that the hearing will likely be held between June 17 and July 2.
To regain compliance, Troika intends to enact a reverse stock split. The company was unable to initiate a reverse split before March 31 due to its Series E Preferred Stock stipulations. However, Troika and the “requisite parties to such agreements” agreed to cancel the no reverse split arrangement, effective as of March 31.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
