Analyst Summary
- Fluent, Inc.’s subsidiary, Fluent, LLC, amended its Credit Agreement for the fourth time.
- The Fourth Amendment requires Fluent to raise at least $5 million in additional capital by March 20, 2025.
- The amendment waived non-compliance with financial covenants as of December 31, 2024.
- The amendment extended the duration of call protection applicable to the loans.
- The amendment modified the financial covenants.
- Fluent intends to raise capital through equity, equity-linked, or subordinated debt financings.
- The Company’s ability to raise capital depends on market factors, the trading price of the Company’s common stock, limitations on the amount of securities the Company can sell, and the Company’s determination as to the appropriate sources of funding for its operations.
Potential Implications
Company Performance
- The company’s ability to secure the required $5 million in additional capital will be critical for maintaining compliance with the amended Credit Agreement.
- Failure to raise the required capital could result in further negotiations with SLR or other adverse consequences.
- The modified financial covenants may provide the company with more flexibility in the short term, but long-term performance will need to improve to maintain compliance.
- The method of raising capital (equity, equity-linked, or subordinated debt) will impact the company’s capital structure and future financial flexibility.
Stock Price
- The need to raise additional capital could put downward pressure on the stock price, especially if the company is forced to issue equity at a discount.
- Successful fundraising could be viewed positively by investors, potentially leading to an increase in the stock price.
- Uncertainty surrounding the company’s ability to raise capital could lead to increased volatility in the stock price.