Just weeks after announcing a strategic review, including a potential company sale, financially pressed e-tailer Boxed Inc. has arranged up to $20 million in new funding.
New York-based Boxed said it has landed a second-lien secured term loan facility of $10 million with FFI Fund Ltd., FYI Ltd. and Olifant Fund Ltd. The agreement also would extend another $10 million in funds “subject to the completion of certain milestones in a process for the sale of the company,” the online bulk-products retailer noted.
According to a filing Friday with the Securities and Exchange Commission, the latter $10 million available under the second-lien facility includes “$5.0 million in additional term-loan commitments that the company may draw upon subject to satisfaction of certain conditions (including the achievement of certain specified sales milestones) and up to $5.0 million of additional term loans that may be extended by the [second-lien] lenders, subject to the execution of a definitive acquisition or purchase agreement by the company, pursuant to which a bona fide third party agrees to purchase more than 50% of the aggregate equity interests or assets of the company and its subsidiaries.”
Regarding a possible company sale, the SEC filing stated, “There can be no assurance that any offers will be made or accepted, that any agreement will be executed or that any transaction will be consummated, in connection with the strategic alternatives process.”
Boxed said it also has amended an existing first-lien debt facility, managed by BlackRock, that reduces its minimum liquidity covenant by $5 million.
In addition, about $32 million of Boxed convertible notes previously held by the lenders have been exchanged for new loans secured by a second-lien security interest in substantially all of the assets of the company and its subsidiaries, Boxed reported. The lenders have been issued warrants to buy 14 million shares of Boxed’s outstanding common shares at an initial exercise price of $3.00 per share.
“This new financing will provide greater flexibility for us to continue to execute on our strategic vision and the strategic alternatives process,” Boxed CEO and co-founder Chieh Huang said in a statement. “We value our existing relationships with funds and accounts managed by BlackRock and the lender[s] and are excited to continue to work closely with them.”
In early January, Boxed reported that it had begun exploring strategic alternatives for the company, including a potential sale.
“There are two main points to it. We continue to actively pursue financing and, as we explore capital-raising initiatives, we have a duty to our stockholders to explore all the options available to us. So that includes a potential sale of the company, potentially partnering with other folks, potentially a merger,” Huang explained to Winsight Grocery Business in a phone interview at the time.
In October and November, Boxed received delisting warnings from the New York Stock Exchange as its stock price and market capitalization fell below required levels. To rectify the situation, Boxed said it would weigh various options, including a reverse stock split, subject to shareholder approval.
Huang told WGB in the interview that Boxed’s financing efforts have been hampered by a tough market for technology-driven companies.
“We’re in a world where technology companies are certainly not being rewarded with the multiples that we saw in years past. And there has been a lower sentiment than in years past on e-commerce companies as well,” he explained. “So when you look at what we do both in e-commerce and technology, I think unfortunately we’re caught right in the middle of that storm."
For investors, Boxed offers a robust B2C and B2B retail business and an end-to-end e-commerce platform offered via a software-as-a-service model. The retail arm provides warehouse club-style shopping—including groceries, pantry items, household staples, health and beauty aids, office supplies, private label, and organic and natural products—through the company’s website and mobile app, but without the membership fees of traditional wholesale clubs. Boxed also operates perishables and rapid delivery services.