Womenswear specialty retailer - The Wet Seal will raise $18.5 million by selling shares of its Class A common stock to a limited number of institutional investors in a private placement.
Wet Seal said it has entered into a securities purchase agreement to sell shares of its Class A common stock to a limited number of institutional investors in a private placement, subject to the terms of the placement, the retailer expects to receive at the closing, gross proceeds from the placement of approximately $18.5 million.
According to Wet Seal, investors in the private placement have agreed to purchase shares of Class A common stock at a per share price equal to the lesser of $1.01, 87.5% of the volume weighted-average price for the 20 consecutive trading day period prior to when the price is set, or if the Company commences a rights offering to its shareholders at a subscription price which is lower than the foregoing, at such a lesser price.
Wet Seal added that it has the right to terminate the anticipated closing of the sale if the volume weighted-average price for its common stock for a 15 consecutive trading day period is below $0.80, subject to investors retaining warrants or receiving a cash payment.
Each investor will also receive, at its option, warrants to purchase additional shares of Class A common stock or a discount to the per share purchase price of four percent, but in no event greater than $0.04 per share. The warrants will be exercisable for five years beginning six months and one day from the date of issuance.
The retailer, who operates 531 stores in 47 states and Puerto Rico, currently expects that the private placement will close in the third or fourth fiscal quarter of the current fiscal year.
Earlier in the day, Wet Seal had said that it intends to raise equity capital between $25-30 million via rights offering, through the sale of shares of its Class A common stock to its stockholders. (AR)
