Markets

Why Waitr Holdings Stock Briefly Popped This Morning

What happened

Shares of Waitr Holdings (NASDAQ: WTRH) briefly popped as much as 13% in early trading after the company said it completed a previously announced stock offering. The stock has since given back much of those gains and is up 2% as of 12:40 p.m. EDT.

So what

The offering was an at-the-market (ATM) deal, meaning Waitr sold newly issued shares at prevailing market prices. The regional food delivery tech company issued nearly 23.7 million shares between March 20 and July 10, raising gross proceeds of $48.3 million. Waitr filed for the offering back in March in order to capitalize on its soaring stock price as food delivery platforms have benefited from increased demand during the coronavirus pandemic.

Waitr recently said it would keep hundreds of jobs in the U.S., reversing a previous decision to move positions to Mexico.

Six meals in plastic takeout containers

Image source: Getty Images.

"With the completion of our ATM equity offering and the previously announced conversion of a portion of our outstanding debt, we benefit from a strong and flexible balance sheet," CEO Carl Grimstad said in a statement. "As of July 14, 2020, our cash-on-hand was approximately $79 million, which we expect to be further reinforced by the continued momentum and meaningful profitability in our business."

Now what

The company will use $10.5 million of the offering's proceeds to pay down a senior secured term loan, with the rest of the money being used for general corporate purposes and growth initiatives. Based on that prepayment, lenders have agreed to reduce the interest rate on the remaining balance associated with the term loan and convertible notes by 2 percentage points for one year.

That will bring the term loan interest rate down to 5.125% and the convertible notes interest rate down to 4%, and the maturity of both debt instruments will be extended by one year.

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Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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