Artisanal Brands Inc. (OTCQB:AHFP), a marketer and distributor of specialty, artisanal and farmstead cheese products and other specialty food products, announced that the holders of a substantial majority of the principal amount of the Company’s outstanding shareholder loans have voluntarily agreed to convert their debt into equity. The conversion is conditional upon the Company completing a private placement of Series A convertible preferred stock, an offering which is currently under way.
The outstanding loans would convert as follows, assuming the Company closes the sale of $2 million of its Series A convertible preferred stock:
- Approximately $2 million in principal amount of secured debt would be converted into 2 million convertible preferred shares.
- Approximately $1.5 million in principal amount of unsecured debt and accrued interest would be converted into common shares at the same $.30 per share conversion price of the preferred stock.
Daniel W. Dowe, president and CEO of Artisanal, said, “By converting their shareholder loans into equity, these early investors in Artisanal are strengthening our capital structure and enabling the Company to fund a growth phase that will significantly expand our footprint in fine wine, liquor and specialty food stores in the tri-state region, as well as construct our first Company-owned retail location this Fall. Additionally, these conversions will allow our long-term supporters to enjoy the potential upside that comes with increased equity ownership.”
“Our team continues to work exceptionally hard at refining our plans to make the Artisanal brand into a consumer’s choice for premium cheese in the retail sector,” Dowe continued. “By expanding into independently-owned retail stores, our Artisanal CheeseClock™ retail merchandising system is gaining more new accounts and higher sell-through. Our major shareholders’ commitment to our work is another vote of confidence in Artisanal’s plans to create long-term value.”