Tuesday Morning Corporation (NASDAQ: TUEM) (“Tuesday Morning” or
the “Company”), a leading off-price retailer of home goods and
décor, today announced that it has entered into an agreement to
secure $32 million in convertible debt financing from a special
purpose vehicle (“SPV”) formed by Retail Ecommerce Ventures LLC
(“REV”), the owner of a diverse portfolio of consumer brands that
includes Pier 1 Imports (“Pier 1”), Linens ‘n Things, Stein Mart,
Modell’s Sporting Goods, and Ayon Capital, LLC (“Ayon”).
Additionally, certain members of Tuesday Morning’s management team,
including Chief Executive Officer Fred Hand, are providing $3
million in convertible debt financing.
The proceeds from the parties’ investments
(collectively, the “Transaction”) are expected to strengthen
Tuesday Morning’s balance sheet and allow it to begin executing an
omni-channel strategy, which will now include an ecommerce presence
and digital activations to complement the Company’s store footprint
over the long-term. The Transaction’s terms also provide for the
following:
- Tuesday Morning will have access to
REV’s fulfillment network, infrastructure and systems, and
technology and ecommerce capabilities;
- Tuesday Morning will enter into a
new licensing agreement that will allow the Company to sell Pier 1
products, and;
- Tuesday Morning’s board of
directors (the “Board”) will be reconstituted, with REV and Ayon
having their designees comprise a majority of the Board.
REV, founded by Tai Lopez and Alex Mehr in 2019,
has significant experience acquiring retail brands and partnering
with management teams to deploy ecommerce-focused strategies.
Examples include Pier 1, Linens ‘n Things, Stein Mart and
RadioShack.
Mr. Hand commented:
“We believe this milestone transaction will
strengthen our financial position and provide sufficient liquidity
to execute on our strategic plan, allowing us to maintain strong
relationships with our valued partners and elevate offerings for
our customers. We look forward to the partnership with REV and
Ayon.”
Messrs. Lopez and Mehr added:
“REV is excited to make this investment as we
see tremendous long-term opportunity for Tuesday Morning in the
home goods and décor category, especially as more consumers expect
an omnichannel experience in the post-pandemic world. We look
forward to making our transformation expertise, technology
capabilities and the Pier 1 brand available to the Company. Our
experienced and proven team is the right partner at the right time
for Tuesday Morning.”
Sidd Pagidipati, Chairman of Ayon,
concluded:
“Ayon is pleased to partner with REV and Tuesday
Morning’s management team to fund the Company’s evolution. Tuesday
Morning has a history of delighting customers and offering unique
value in the home goods category. By making this significant
investment, we are excited to be part of the next chapter at
Tuesday Morning, including its loyal customers and wonderful
employees.”
Terms of the Proposed
Transaction
The Transaction includes the purchase by the SPV
of (i) $7.5 million in aggregate principal amount of FILO C Term
Loan Notes due December 31, 2027 (the “FILO C Term Loan Notes”),
and (ii) $24.5 million in aggregate principal amount of junior
secured exchangeable notes due December 31, 2027 (the “SPV
Convertible Notes”). In addition, members of the management team
will purchase $3.0 million of the junior secured exchangeable notes
(together with the SPV Convertible Note, the “Convertible Notes”).
In addition to providing liquidity to support the Company’s ongoing
operations, proceeds of the Transaction are expected to repay a
portion of Tuesday Morning’s borrowings under its ABL revolving
credit facility and $7.5 million of the Company’s currently
outstanding “first in last out” term loans, in addition to closing
costs of the Transaction.
The FILO C Term Loan Notes and the Convertible
Notes (together, the “Convertible Debt”) will be exchangeable into
shares of the Company’s common stock at a conversion price of
$0.077 per share, or approximately 454,545,454 shares issuable upon
exchange in full. Only a portion of the Convertible Debt can be
immediately exchanged into 90 million shares of the Company’s
common stock. The remaining portion of Convertible Debt cannot be
exchanged into the Company’s common stock unless and until the
Company’s certificate of incorporation is amended to increase the
Company’s authorized capital stock or to provide for a reverse
stock split of the Company’s common stock.
The Nasdaq Stock Market LLC (“Nasdaq”) rules
would normally require stockholder approval prior to the closing of
the Transaction; however, the Company requested and received a
financial viability exception to the stockholder approval
requirement pursuant to Nasdaq Listing Rule 5635(f). The financial
viability exception allows an issuer to issue securities upon prior
written application to Nasdaq when the delay in securing
stockholder approval of such issuance would seriously jeopardize
the financial viability of the issuer. As required by Nasdaq rules,
the Audit Committee of the Company's board of directors, which is
comprised solely of independent and disinterested directors,
approved the Company's reliance on the Nasdaq financial viability
exception. As a condition to reliance on the Nasdaq financial
viability exception, the Company is mailing a letter to
stockholders no later than 10 days before the anticipated closing
date notifying them of the Company’s intention to close the
Transaction without stockholder approval.
Based upon the number of shares of the Company’s
common stock currently outstanding, and upon exchange of a portion
of the Convertible Debt for 90 million shares, the SPV will own a
majority of the Company’s outstanding common stock and will
accordingly have the ability to approve an amendment to the
Company’s certificate of incorporation to increase the Company’s
authorized capital stock or to provide for a reverse stock split of
the Company’s common stock.
The Transaction will result in a change in
control of the Company and the SPV will designate a majority of the
Company’s board of directors at the closing of the Transaction.
Tuesday Morning’s board of directors will be reconstituted as a
nine-member Board comprised of five directors designated by the SPV
reasonably accepted to the Board, three independent directors
reasonably acceptable to each of the SPV and the Board, and Fred
Hand, Chief Executive Officer of Tuesday Morning. Tuesday Morning’s
management team remains in place under Mr. Hand’s leadership as
Chief Executive Officer.
The Transaction is expected to close on or about
September 19, 2022. The closing of the Transaction is subject to
the satisfaction of certain conditions and there can be no
assurance that the Transaction will be consummated.
Further details regarding the terms and
conditions of the proposed Transaction are set forth in the
Company’s Current Report on Form 8-K filed with the Securities and
Exchange Commission on September 9, 2022.
The securities described in this press release
have not been registered under the Securities Act of 1933, as
amended (the “Securities Act”), and may not be offered or sold
unless registered under the Securities Act or unless an exemption
from registration is available. This press release shall not
constitute an offer to sell or the solicitation of an offer to buy
nor shall there be any sale of securities in any state in which
such offer, solicitation or sale would be unlawful.
Piper Sandler is serving as financial advisor
and Haynes and Boone, LLP, Troutman Pepper Hamilton Sanders LLP and
Wachtell, Lipton, Rosen & Katz are serving as legal advisors to
the Company. Barnett Kirkwood Koche Long & Foster, P.A., Taft
Stettinius & Hollister LLP and Vinson & Elkins LLP are
serving as legal advisors to the SPV.
Announcement of Fiscal Year 2022
Financial Results
In light of the expected timing of the
Transaction, the Company now expects to announce financial results
for the fiscal year ended July 2, 2022, on or about September 23,
2022.
About Tuesday Morning
Tuesday Morning Corporation is one of the
original off-price retailers specializing in name-brand,
high-quality products for the home, including upscale home
textiles, home furnishings, housewares, gourmet food, toys and
seasonal décor, at prices generally below those found in boutique,
specialty and department stores, catalogs and on-line retailers.
Based in Dallas, Texas, the Company opened its first store in 1974
and currently operates 487 stores in 40 states. More information
and a list of store locations may be found on the Company's website
at www.tuesdaymorning.com.
About Retail Ecommerce
Ventures
Retail Ecommerce Ventures (“REV”), which was
founded by Tai Lopez and Alex Mehr in 2019, owns and operates a
portfolio of beloved consumer brands, including Pier 1 Imports,
Dressbarn and Stein Mart, that generated billions in sales in the
decade prior to our acquisition. With unrivaled experience in
digital marketing, ecommerce and technology, REV focuses on
transforming brick-and-mortar retailers for the 21st century. For
more information, please visit:
https://www.retailecommerceventures.com.
About Ayon Capital
Ayon Capital ("Ayon") is a purpose-driven family
office that invests across technology, blockchain, healthcare and
consumer verticals. Ayon partners with leadership teams and
operators to create businesses that focus on delivering exceptional
value to consumers in a technology-enabled future. Ayon investments
include Physician Partners, Brave Software, Zebpay and Nirvana
Health. Ayon’s investments have become industry-leading companies
and resulted in numerous multi-billion-dollar exits.
https://www.ayon.com/
CAUTIONARY NOTICE REGARDING
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking
statements, which are based on management’s current expectations,
estimates and projections. Forward-looking statements include
statements regarding the closing and projected benefits of the
financing and related transactions described in this press release
and the Company’s liquidity and capital resources. The
forward-looking statements in this press release are subject to
risks and uncertainties that could cause actual results to differ
materially from those reflected in the forward-looking
statements.
These risks and uncertainties include, but are
not limited to, the following: any inability to satisfy the
conditions to closing of the financing transactions described in
this press release or any failure by the purchasers to purchase the
securities; any inability to effectively launch our proposed
ecommerce platform or to realize anticipated benefits from the
proposed Pier 1 licensing arrangement; the effects and length of
the COVID-19 pandemic; changes in economic and political conditions
which may adversely affect consumer spending, including current
inflationary pressures; our ability to identify and respond to
changes in consumer trends and preferences; our ability to mitigate
reductions of customer traffic in shopping centers where our stores
are located; increases in the cost or a disruption in the flow of
our products, including the extent and duration of the ongoing
impacts to domestic and international supply chains from the
COVID-19 pandemic; impacts to general economic conditions and
supply chains from the disruption in Europe; impacts of inflation
and increasing interest rates; our ability to continuously attract
buying opportunities for off-price merchandise and anticipate
consumer demand; our ability to obtain merchandise on varying
payment terms; our ability to successfully manage our inventory
balances profitably; our ability to effectively manage our supply
chain operations; loss of, disruption in operations of, or
increased costs in the operation of our distribution center
facility; our ability to generate sufficient cash flows, maintain
compliance with our debt agreements and continue to access the
capital markets; unplanned loss or departure of one or more members
of our senior management or other key management; increased or new
competition; our ability to maintain and protect our information
technology systems and technologies and related improvements to
support our growth; increases in fuel prices and changes in
transportation industry regulations or conditions; changes in
federal tax policy including tariffs; the success of our marketing,
advertising and promotional efforts; our ability to attract, train
and retain quality employees in appropriate numbers, including key
employees and management; increased variability due to seasonal and
quarterly fluctuations; our ability to protect the security of
information about our business and our customers, suppliers,
business partners and employees; our ability to comply with
existing, changing and new government regulations; our ability to
manage risk to our corporate reputation from our customers,
employees and other third parties; our ability to manage litigation
risks from our customers, employees and other third parties; our
ability to manage risks associated with product liability claims
and product recalls; the impact of adverse local conditions,
natural disasters and other events; our ability to manage the
negative effects of inventory shrinkage; our ability to manage
exposure to unexpected costs related to our insurance programs;
increased costs or exposure to fraud or theft resulting from
payment card industry related risk and regulations; our ability to
meet all applicable requirements for continued listing of our
common stock on The Nasdaq Stock Market, including the minimum bid
requirement of $1.00 per share; our ability to maintain an
effective system of internal controls over financial reporting; and
other risks and uncertainties more fully described in Item 1A Risk
Factors in our Annual Report on Form 10-K for the year ended June
30, 2021 and the Company’s Quarterly Report on Form 10-Q for the
quarter ended April 2, 2022. Except as may be required by law, the
Company disclaims obligations to update any forward-looking
statements to reflect events and circumstances after the date on
which the statements were made or to reflect the occurrence of
unanticipated events.
Contacts
For Tuesday Morning
INVESTOR RELATIONS:
Caitlin Churchill
ICR203-682-8200Caitlin.Churchill@icrinc.com
MEDIA:
TuesdayMorning@edelman.com
For Retail Ecommerce Ventures
Longacre Square PartnersGreg Marose / Charlotte Kiaie,
646-386-0091gmarose@longacresquare.com / ckiaie@longacresquare.com
Tuesday Morning (NASDAQ:TUEM)
Graphique Historique de l'Action
De Mai 2024 à Juin 2024
Tuesday Morning (NASDAQ:TUEM)
Graphique Historique de l'Action
De Juin 2023 à Juin 2024