Peekay: Underwriter For Stock Offering Named

Peekay Boutiques’ plan to sell stock to the public took a significant step forward with the naming of an underwriter, Lake Street Capital Markets. Filings with the SEC in late November contained that announcement as well as details of the sale.

Several months ago Peekay had stated its plan to offer shares to the public but had not, until now, announced an underwriter.

Peekay said it plans to offer 4,175,000 shares at an anticipated price of “between $6 and $8 per share,” thus raising between $25,050,000 and $33,400,000. The date of the offering and the exact share price have not been announced.

Currently existing shareholders own 2,545,132 shares in the firm for which they paid an average price of $6.42. The underwriter has an option to purchase additional shares, which if exercised in full, will mean the total number of shares of common stock outstanding immediately after the offering would be 7,346,382.

As of September 30, 2015,Peekay’s total debt was approximately $54 million and interest expense on this debt totals “$6.6 million annually, which exceeds the operating profits generated through the operations of its business,” according to a previous filing. This has contributed to a string of losses for the company in the current and previous years. (See other article this section).

Peekay stated in the latest filing that “We currently intend to use the net proceeds from this offering as follows: (i) approximately $16 million will be used to repay our Term A Loans...; (ii) approximately $2.3 million will be used to pay accrued fees owed to our senior lenders and managers, (iii) approximately $0.5 million will be issued to repay accrued interest to the Christals and Peekay note holders, (iv) approximately $1.5 million will be issued to upgrade our computer systems and software; and (v) approximately $6.7 million will be used for working capital and general corporate purposes. In order to fund future growth, we may seek to enter into a new senior debt facility, on terms more favorable than our current debt facility.”

Lake Street Capital Markets is and investment bank based in Minneapolis and has served as underwriter of several recent offerings for companies that include SunOpta Inc., a company focused on organic, non-genetically modified and specialty foods; Radiant, a third party logistics provider; Celyad, a biopharmaceutical company; Clean Diesel Technologies, Inc., a vehicle emissions control system provider; and Kona Grill, a restaurant chain.

In its filing, Peekay stated, “We plan to apply for the listing of our common stock on The NASDAQ Capital Market in the first quarter of 2016 after we satisfy the NASDAQ seasoning requirement. Our shares will not be listed on The NASDAQ Capital Market upon the closing of the offering contemplated by this prospectus because we are subject to the NASDAQ seasoning requirement. Issuers that consummate a reverse merger with a shell company like we did on December 31, 2014, are subject to a seasoning requirement under NASDAQ’s listing rules.”