Business Context and Reporting Period
This Form 8-K Current Report, dated August 13, 2021, covers Wheeler Real Estate Investment Trust, Inc. (WHLR), a Maryland corporation. The filing reports the expiration of a previously announced rights offering and the entry into a material definitive agreement regarding new debt securities.
Key Financial Metrics and Transaction Details
The Company successfully completed a rights offering for the purchase of 7.00% senior subordinated convertible notes due 2031 (the "Notes").
- Total Principal Amount Issued: $30,000,000
- Breakdown of Issuance:
- Basic subscription privilege: $6,264,025
- Over-subscription privilege: $21,543,500
- Backstop commitment: $2,192,475
- Interest Rate: 7.00% per annum
- Interest Payment Dates: Semi-annually on June 30 and December 31, commencing December 31, 2021
- Backstop Parties: Magnetar Structured Credit Fund, LP; Magnetar Longhorn Fund LP; Magnetar Lake Credit Fund LLC; Purpose Alternative Credit Fund – F LLC; Purposes Alternative Credit Fund – T LLC; and AY2 Capital LLC.
The filing does not provide specific revenue, profit, cash flow, or liquidity metrics for the reporting period, as this is a transaction-specific report rather than a periodic financial statement.
Material Changes and Terms
The primary material change is the creation of a new direct financial obligation of $30 million in senior subordinated convertible notes. Key terms include:
- Subordination: The Notes are subordinate and junior in right of payment to the Company's obligations to holders of senior indebtedness.
- Interest Payment Flexibility: Interest may be paid in cash, shares of Series B Preferred Stock, shares of Series D Cumulative Convertible Preferred Stock, or a combination thereof. The value of preferred stock used for interest is calculated based on a 15-day VWAP average multiplied by 0.55.
- Redemption: After January 1, 2024, the Company may redeem the Notes at 100% of the principal amount plus accrued interest. Redemption may be paid in cash, common stock, or a combination.
- Delivery: Notes are expected to be delivered via the Depository Trust Company on or about August 19, 2021.
Outlook, Risks, and Management Commentary
Management announced the results of the Rights Offering via a press release on August 16, 2021. The filing highlights the successful execution of the offering with the assistance of backstop parties, ensuring the full $30 million target was met. The filing notes that the description of the Indenture is qualified by reference to the complete text filed as Exhibit 4.1. No specific forward-looking guidance or risk factors beyond the standard subordination and redemption terms are detailed in this specific text.
Investor Verification Checklist
- Verify the full text of the Indenture (Exhibit 4.1) for detailed covenants and conversion mechanics.
- Confirm the settlement date of August 19, 2021, for the delivery of Notes.
- Review the August 16, 2021 press release (Exhibit 99.1) for additional commentary on the offering results.
- Assess the impact of the 7.00% interest obligation on future cash flows, noting the option to pay interest in preferred stock.
- Monitor the Company's ability to service senior indebtedness prior to these subordinated notes.