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Capstone Holding Corp.("Capstone" or the "Company") (NASDAQ:CAPS), a national building products distribution platform, today announced the exchange of $1.9 million in debt by a related party for a newly issued series of non-convertible preferred equity. This strategic deleveraging retires 100% of the targeted debt and lowers 2026 interest expense by more than $170k. The transaction strengthens Capstone's balance sheet and leverage profile, providing greater financial flexibility to pursue accretive acquisitions.
Importantly, no new common shares were issued. The preferred equity is non-dilutive, leaving the common share count unchanged and preserving value for existing shareholders.
Key Highlights:
$1.9 Million Debt Retired: All targeted Brookstone debt was exchanged for preferred equity. Capstone's funded debt drops by $1.9 million - a significant decrease in leverage - which will boost credit metrics.
No Dilution to Common Stockholders: Preferred shares are not convertible into common stock, ensuring no dilution to current equity owners.
Dividend Structure: Dividends accrue at an 8% coupon and, at the Company's election, can be paid-in-kind (PIK) by issuing additional preferred shares, preserving cash to fund growth.
Voting Rights: Preferred shares do have a vote, proportional to their economic interest.
Long-Term Alignment: Preferred equity is redeemable only in the event of a change of control or after 7 years, aligning investor interest with Capstone's multi-year growth plan.
Posted In: CAPS
