The Parent Company (NASDAQ: KIDS), a leading online commerce, content and new media company for growing families, recently hosted a conference call to discuss the completion of a multi-year financing agreement with an entity in the D.E. Shaw Group. Under the terms of the agreement, D.E. Shaw Group will provide up to $25 million of junior-secured debt financing with $10 million made immediately available to The Parent Company. Additionally, none of the debt facility is convertible into equity and only the first portion of $10 million has an equity warrant component.
Shaw, a major shareholder of The Parent Company, provided funding to help buoy the stock price to a higher level that is more reflective of the company’s fundamental value. The specifics of the deal do not include any conversion right to the financing and the warrants are extremely light compared to the money. The total dilution to the company post-closing is 11 percent against a $25 million facility. The Parent Company will utilize this financing to pursue several business initiatives and launch additional commerce sites in the near future.
The company plans to launch Toys.com later in the year before the holiday season. In addition, senior management is working with a number of private companies that are considering partnering with the company. All of these factors are expected to add to the potential of meaningful growth and profitability in 2008.
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