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Franchise Group, Inc. (FRG) Strengthening Business With Stock Offering and Loan Repayment

Franchise Group, Inc. (FRG) saw attraction of roughly 6.8% in its stock price on Tuesday to conclude trading at a closing price of $25.14. The stock’s weekly performance is currently at 3.84% while is has been 8.36% from year to date.

The company recently announced pricing of its underwritten registered public offering of 1,200,000 shares. The shares offered were of Series A Cumulative Perpetual Preferred Stock with annual interest rate of 7.50%. Per share par value of the offered shares was $0.01 with a liquidation preference of $25.00 per share. The initial public offering price of that Preferred Stock was $25.00 per share which raised gross proceeds of $30 million for the company. Net proceeds are subject to deduction of underwriting discounts, estimated offering expenses and structuring fee.

FRG also granted the underwriters with a 30-day period to exercise option of purchasing up to 180,000 additional shares of Preferred Stock. The offering at the time was expected to be closing by September 18, 2020 with regulatory closing conditions applied.

Subject to approval, the company expected to start trading the Preferred Stock in NASDAQ under the ticker symbol “FRGAP” within 30 business days following the closing date of the offering. Company was intending utilizing the net proceeds for general corporate purposes. The funds could also be utilized to fund future investments and acquisitions.

Franchise Group last month fully repaid an acquisition term loan amounting $70 million. The company utilized the proceeds of that loan in December 2019 to acquire The Vitamin Shoppe (“TVS”).

FRG was in expectations of reducing the larger portion of that Vitamin Shoppe’s Acquisition Loan which it previously stated, said Brian Kahn, CEO of Franchise Group. The company was in efforts of reducing outstanding balance of not more than $28 million by end of this year. But TVS’ better performance combined with efficient cash management by its management and support of Great American Capital Partners as our lender, the company fully adjusted the $31.6 million of outstanding balance of that loan, Kahn added.

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