What happened
Meal kit purveyor Blue Apron (APRN) had a good week on Wall Street: The company's shares rose by nearly 8%, according to S&P Global Market Intelligence. Investors were particularly cheered by some positive financing news from the company.
So what
On Monday, Blue Apron kicked off the week on a high note when it announced a pair of measures that will improve the company's finances.
Image source: Getty Images.
These will take the form of two "capitalization events." The first is a $40.5 million private placement, the bulk of which ($40 million) is to be provided by RJB Partners, which is affiliated with Joseph Sandberg, a longtime investor in the company. Putting her money where her mouth is, Blue Apron CEO Linda Findley will chip in the other $500,000.
The second event is the refinancing of $30 million in company debt. On Thursday, Blue Apron announced it had signed a note purchase agreement with Allianz Global Investors for the latter to float $30 million worth of company senior secured notes that mature in 2027. These will bear an annual interest rate of just under 8.9%, though that will step up to nearly 11.9% if they don't meet certain ratings requirements.
The proceeds from these securities were combined with cash on hand to retire an existing Blue Apron senior secured loan.
Now what
"The proceeds from the closed transactions and expected additional debt and equity fundings support our continued turnaround as we drive toward long-term sustainable and profitable growth," Findlay said in the press release trumpeting the moves.
That'll be a fine trick if the food service company can pull it off. Although it benefited somewhat when consumers were largely stuck at home during the worst of the pandemic, low barriers to entry in the meal kit space have fostered a host of competitors. That has hampered Blue Apron's growth and pushed it consistently into the red on the bottom line. Shareholders will be hoping that these new financing moves can help it turn that situation around.
