Unique Fabricating, a provider of engineering and manufacturing multi-material foam, rubber and plastic components utilized in noise, vibration and harshness management and air/water sealing applications for the transportation, appliance, medical and consumer/off-road markets, reached agreement with its bank lenders and with certain existing equity investors. The agreement with investors provides $3 million in debt financing. The company’s bank lenders have agreed to certain amendments to its existing credit facility, including allowing the company to raise up to $4 million of additional debt financing. The company closed today on $3 million of the proposed $4 million of new financing. Taglich Brothers, which is acting as placement agent for the financing, expects to close on the balance of the $4 million within several business days.
The company has engaged B. Riley as investment banker in connection with a proposed comprehensive refinancing of the senior secured credit facility. There can be no assurance that the company will be able to obtain such refinancing.
Taglich Brothers is acting as placement agent for up to $4 million in pay-in-kind notes, bearing interest at the rate of 12% per annum. Investors in the notes also will receive warrants for up to an aggregate of 120,000 shares (assuming the entire $4 million is raised) at an exercise price of equal to the greater of $0.75 per share or the closing sales price of the company’s common stock on the date immediately preceding the last closing of the notes offering. Investors will receive an additional 280,000 warrants if the notes are not repaid within 12 months. Interest on the notes through the end of 2022 will be convertible at the holders’ option into common stock at a price equal to the warrant exercise price. The notes are secured by and will be paid from the expected receipt of the company’s Employee Retention Credits (ERC) and any proceeds from the sale of a non-operational financial asset. The proceeds of this financing to date have been used to reduce the outstanding principal amount of the Company’s bank revolving line of credit, reduce the bank term loans and prepay the Dec. 31, 2022 term loan principal payment.
The company’s existing forbearance agreement with the bank lenders was extended to Nov. 7, 2022, and certain financial and cash flow covenants were amended in the company’s bank agreement.
“Unique Fabricating retained B. Riley in July to advise and assist with respect to a proposed comprehensive refinancing of the existing senior secured credit facility,” Richard L. Baum, chairman of the board of directors of Unique Fabricating, said. “We believe that today’s liquidity bridge is an important first step towards a refinancing, and we continue to work with B. Riley to complete that refinancing. Doug and the Unique team have worked diligently to improve operations, reduce costs and continue to meet constantly changing customer timelines. We are encouraged by the cooperation of our existing lenders, and the interest received thus far from several qualified institutions in the proposed refinancing. Our goal is to complete this refinancing as expeditiously as possible.”
“We believe the note offering will provide us the necessary financing to execute our business plan while we seek refinancing and should mitigate concerns from customers about our financial condition,” Doug Cain, CEO of Unique Fabricating, said. “Unique Fabricating continues to efficiently navigate unprecedented industry challenges, and we believe that this financing should bolster our ability to emerge as one of the stronger participants in the industry. We are grateful for the continued support of our lenders and investors, as we work through this refinancing initiative.”
