Telemedicine company LifeMD Inc (LFMD) has announced they will be selling a new preferred stock issue. The announced quantity of shares is 1.4 million, plus up to 210,000 for over allotment. LifeMD was previously named Conversions Labs.
The offering will be another with B Riley Securities involvement so this means another issue with bonus payments for early redemption. Starting in October, 2022 the issue will be redeemable at $25.75 and then reducing 25 cents each year until October, 2025 after which the issue will be redeemable at $25 (all including accrued dividends of course).
Additionally the company will establish a segregated account to prefund the 1st 8 quarters of preferred stock dividends.
I am not familiar what so ever with LifeMD so will have to dig a bit to get some data. The company website is here.
The preliminary prospectus can be found here.
Early Bird dug out this offering.
Sorry – Just posted this in Reader Initiated before seeing your posting this topic:
So they’re funding dividend payments for the first 2 years, but have a call provision in one year, they’re using $10 mil of proceeds to pay back B Rily but RILY’s “interested in” buying $10 mil of the new issue and they’re writing in a provision that limits their own ability to issue debt without permission of the preferred holders, and B. Riley Securities, Inc., an underwriter participating in this offering, is deemed to have a “conflict of interest” within the meaning of Rule 5121 of the Financial Industry Regulatory Authority, Inc. or Rule 5121 requiring a “qualified independent underwriter” to participate and that QIU will be EF Hutton, division of Benchmark Investments, LLC. Why do I keep thinking of Drexel Burnham?
B Riley keeps getting into these deals while carrying giant sized debt. This will come home to roost sometime down the road.
Tim; In last weeks issue of Barron’s which I have gotten for over 30+ years there was a small article that said there has been over $672 Billion of low rated and junk debt issued in the US over the last 12 months. It got me to thinking as to when the S— Hits the Fan what will this debt trade at then???
Chuck P – when the economy hits the recession skids it is going to be very, very ugly.
Yet I still am playing Russian roulette with the common……..
2WR—it works–until it doesn’t
I had a crazy good buys to get into RILY at 13.56 and 16 in 2017 in 2 different accounts (one taxable), so I just now decided to at least take that money off the table… trouble is, I have no place I want to go with the proceeds and have built up a sizable cash position already so I seem to be well positioned to have inflation get the best of me …
Wow–that was a good move–actually staying in it for so long was an excellent move.
Nice long run in RILY!
What made you sell tho…a shift in fundamentals?
Don’t forget I only sold about 25% so I’m still commited to the name (and own 2 of the notes as well). On the plus side, there’s been a whole lot of continuing insider buys, so that’s good, but what’s been bothering me more and more is reading the details on all the really junky names they’re bringing to market and their backdoor equity type commitments to these issuers.. More and more of them seem to have convoluted “conflict of interest” type concerns similar to what they describe in LifeMD with the bottom line consequence to RILY being them ending up holding a lot of really risky positions in some pretty high relative amounts…. That seems to me to put them into a position where when the correction comes, or the economy slides, RILY has the potential to move downward much faster than the market… Call it increasing beta in the name if you will at potentially the wrong time. Sure, I could have made the same decision a few times since ’17, but the position had grown in size since then so it made some sense to trim it back now anyway. I also mentioned earlier, the more I read their prospectuses on issues they bring, the more I’m reminded of Michael Milken type dealings and webs of influence…. you know how that turned out…So I’m watching closely.