Rekor Systems Announces Agreement on Note Exchange
July 01 2020 - 7:30AM
Rekor Systems, Inc. (REKR) (“Rekor”), a Maryland-based company
providing real-time roadway intelligence through AI-driven
decisions, announced today that it has reached an agreement on a
consensual balance-sheet restructuring with its lenders involving a
debt-for-equity swap and other loan modifications. The transaction
will have an immediate impact on Rekor’s balance sheet by extending
the maturity and significantly reducing the amount of the Company’s
outstanding promissory notes.
In March 2019, investors loaned Rekor
$20,000,000 in exchange for senior secured promissory notes (the
“Notes”) and warrants. A portion of the Notes were previously
redeemed. In an agreement reached yesterday noteholders have agreed
to a redemption of approximately 75% of the remaining principal
balance of the Notes as of June 30, 2020. Upon closing of the
transaction, approximately $14.6 million aggregate principal amount
of the Notes, including accreted interest plus certain fees payable
pursuant to the terms of the Notes, will be redeemed in exchange
for common stock at a rate of $4 per share. The noteholders have
also agreed that the maturity of the $4.9 million remaining balance
of the Notes will be extended until December 31, 2021.
“The agreement to this refinancing is an
important milestone for the Company and is a critical next step in
our journey,” said Robert A. Berman, President and CEO, Rekor. “The
new capital structure will give us the flexibility to invest in
continued growth, immediately expand our go-to-market strategy and
generate greater free cash flow going forward at all points in our
business cycle.”
The holders of the remaining Notes have also
agreed to modify certain covenants in the Notes, which will allow
the Company to use proceeds from its recently completed corporate
restructuring for working capital purposes. Rekor has completed the
previously announced restructuring by selling its remaining
non-core subsidiary.
“This note exchange will be a giant step
forward. It will immediately improve the Company’s liquidity and
financial stability. The covenant modifications will allow proceeds
from the sale of our non-core subsidiary to be immediately directed
to the rapid expansion of our high margin technology segment,” said
Eyal Hen, CFO, Rekor. “The Company will also realize positive
stockholder’s equity and achieve a significant reduction in
interest cost, which will further contribute to shareholder
value.”
Closing of the Note exchange and amendment of
the remaining Notes remain subject to satisfaction of customary
closing conditions, including approval for the listing of the
exchange shares by Nasdaq.
About Rekor Systems, Inc.
Rekor (Nasdaq:REKR) is a Maryland-based company
providing real-time roadway intelligence through AI-driven
decisions. Rekor bridges commercial and government sectors with
actionable, real-time vehicle recognition data to enable informed
decisions faster, and with greater outcomes. Rekor is transforming
industries like Public Safety, Customer Experience, and Smart
Cities in more than 70 countries across the globe with smarter,
quicker, cost-competitive vehicle recognition solutions for
security, revenue discovery and recovery, public safety, electronic
toll collection, brand loyalty, parking operations, logistics, and
traffic management. We use the power of artificial intelligence to
analyze video streams and transform them into AI-driven decisions
by our clients. Our machine learning software can turn most IP
cameras into highly accurate and affordable vehicle recognition
devices used to help protect lives, increase brand loyalty, and
enhance operations and logistics, without the need to install
expensive new infrastructure. We make what was once considered
impossible, possible. To learn more please visit our
website: https://rekor.ai.
Forward-Looking Statements
This press release includes statements
concerning Rekor Systems, Inc. and its future expectations, plans
and prospects that constitute "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, including statements regarding the closing of the Note
exchange and the amendment of the remaining Notes. Such
forward-looking statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
For this purpose, any statements that are not statements of
historical fact may be deemed to be forward-looking statements. In
some cases, you can identify forward-looking statements by terms
such as "may," "should," "expects," "plans," "anticipates,"
"could," "intends," "target," "projects," "contemplates,"
"believes," "estimates," "predicts," "potential," or "continue," by
the negative of these terms or by other similar expressions. You
are cautioned that such statements are subject to many risks and
uncertainties that could cause future circumstances, events, or
results to differ materially from those projected in the
forward-looking statements, including the risks that actual
circumstances, events or results may differ materially from those
projected in the forward-looking statements, particularly as a
result of various risks and other factors identified in our filings
with the Securities and Exchange Commission. All forward-looking
statements contained in this press release speak only as of the
date on which they were made and are based on management's
assumptions and estimates as of such date. We do not undertake any
obligation to publicly update any forward-looking statements,
whether as a result of the receipt of new information, the
occurrence of future events, or otherwise.
Media Contact:
Emily Burdeshaw
REQ For Rekor Systems
rekor@req.co
Investor Contact:
Charles Degliomini
Rekor Systems, Inc.
ir@rekor.ai
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