Major Debt Reduction Achieved
Rekor Systems, Inc. (NASDAQ:REKR) ("Rekor") (“the Company”), a Maryland-based company providing real-time roadway intelligence through AI-driven decisions, announced today that on July 15, 2020 it completed the final step to consummate the Note Exchange Agreement that was signed on June 30, 2020.
“We’ve benefitted greatly from the support of our noteholders. They have given us the resources to seize remarkable opportunities, overcome significant challenges, and position the Company for a period of outstanding performance,” said Robert Berman, CEO, Rekor. “Completion of this transaction reflects the extraordinary level of trust they have gained in our ability to grow rapidly despite the many challenges we face. The entire team here at Rekor is grateful for their continuing support.”
In March 2019, investors loaned Rekor $20,000,000 in exchange for senior secured promissory notes and warrants. A portion of the Notes was previously redeemed. In an agreement reached on June 30, 2020, noteholders agreed to a redemption of approximately 77% of the remaining principal balance of the Notes as of June 30, 2020. As contemplated by the Note Exchange Agreement, approximately $15.1 million in aggregate principal amount of the Notes, including accreted interest, plus call premiums and other fees payable pursuant to the terms of the Notes totaling $2.3 million, were redeemed in exchange for 4,349,497 shares of common stock at a rate of $4 per share.
Following completion of the transaction, only $4.5 million aggregate principal amount of the Notes remain outstanding, while shares of common stock outstanding increased to approximately 27.3 million shares. Concurrently with the execution of the Note Exchange Agreement, the remaining noteholders also agreed to extend the maturity of the $4.5 million remaining balance of the Notes until December 31, 2021 and to waive certain financial covenants. Detailed information concerning this transaction is contained in the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission (the “SEC”) on July 6th, 2020.
“The note exchange is a major milestone for the Company as it immediately improves our cash flow and increases our financial flexibility.” said Eyal Hen, CFO, Rekor. “The transaction has transformed our balance sheet, increased shareholder’s equity and will result in a dramatic reduction in interest expense.”