Eastside Distilling signs non-binding term sheet to convert debt for equity

Eastside Distilling announces it has signed a non-binding term sheet with key first and second lien debt holders that, if completed, will convert a substantial portion of outstanding debt to equity. This would significantly reduce interest expense going forward and help the Company to regain compliance with the Shareholders Equity Rule for continued Nasdaq listing. In the proposed transaction, principal creditors would exchange $6.2M of debt for equity at an exchange rate of no less than $4.00 per common share equivalent and no more than $4.80 per common share equivalent. New equity would be limited to less than 20% of total voting stock with the balance in new non-voting convertible preferred stock. In addition, interest payments on the remaining debt would be restructured and certain debt maturities would be extended. These changes would have a materially positive impact on cash flow and support the Company’s growth initiatives, especially in digital can printing. After submitting the proposed deleveraging plan to Nasdaq, the Company received notification on June 8 that Nasdaq has extended the deadline for the Company to achieve compliance with its Shareholders Equity Rule to September 30. The Company received notice on May 30 that it had regained compliance with the minimum price requirement for continued listing.