NEW YORK, NY / ACCESSWIRE / JANUARY 6, 2020 / CTI Industries Corporation (NASDAQ:CTIB) ("CTI" or the "Company") today announced that it entered into a significant new investment arrangement that it expects will enable the Company to implement its strategic and financial plans. In conjunction with this investment, CTI intends to execute an amendment with its bank to modify its credit facility and has submitted its first plan to regain compliance with continued listing standards to Nasdaq.
On January 3, 2020, CTI entered into an agreement to sell up to $5 million of convertible preferred stock to a new strategic investor. The first $2.5 million is expected to be funded on or before January 10, 2020, while the balance of $2.5 million is will close after certain conditions are met. The most notable conditions are a change in the Company's name from CTI Industries Corporation to Yunhong CTI Ltd., as well as shareholder approval of the transaction. The preferred stock will be convertible into common stock at $1 per share. The new investor also has the right to appoint a new Company board member.
"Our Company looks very different today than a year ago based upon the extensive changes we have made and are making, enabled by this new convertible preferred stock investment," said Mr. Frank Cesario, President and Chief Executive Officer. "We are simplifying our structure and will be able to focus on implementing substantial cost savings programs and enhancing revenues within our new model. Once fully funded, this convertible preferred stock investment dramatically improves our capital structure and addresses our highly levered balance sheet. This will eliminate a significant impediment to implementing the next stage of our profit improvement plans. The Company name change is an exciting new chapter for CTI signifying a rebranding and commitment to the evolution of the Company. We look forward to implementing our strategies and continuing our business renewal process."
CTI had been operating under a Forbearance Agreement with its primary lender due to certain prior defaults. This agreement was scheduled to terminate on January 10, 2020. Along with this investment, CTI and the lender intend to enter into an amended agreement designed to incorporate this new investment into an ongoing credit facility, including new loan covenants.
On November 21, 2019, CTI received a notice of failure to satisfy a continued listing standard from Nasdaq. Specifically, the Company stockholders' equity had fallen below the required $2.5 million. On January 3, 2020, CTI submitted a Company stockholders' equity compliance plan to Nasdaq for consideration. Separately, CTI received a notice on January 2, 2020 regarding the Company's failure to hold an annual meeting of stockholders in 2019 and must submit that plan to regain compliance by February 17, 2020.
CTI Industries Corporation is a leading manufacturer of foil and latex balloons, develops, produces and markets vacuum sealing systems for household use and produces laminated and printed films for commercial uses. CTI also distributes Candy Blossoms and other gift items. CTI markets its products throughout the United States and in several other countries.
Forward Looking Statements
Statements made in this release that are not historical facts are "forward-looking" statements (within the meaning of Section 21E of the Securities Exchange Act of 1934) that involve risks and uncertainties and are subject to change at any time. These "forward-looking" statements may include, but are not limited to, statements containing words such as "may," "should," "could," "would," "expect," "plan," "goal," "anticipate," "believe," "estimate," "predict," "potential," "continue," or similar expressions. We have based these forward-looking statements on our current expectations and projections about future results. Although we believe that our opinions and expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements, and our actual results may differ substantially from statements made herein. We cannot anticipate the duration of increased tariffs between the United States and other countries, particularly China. We do not know whether we will be successful in passing such additional costs through to customers. Our plans are predicated on the successful and timely conclusion of the transactions described in this release. Any failure to do so would have a negative impact on our financial condition, including our ability to continue as a going concern. More information on factors that could affect CTI's business and financial results are included in its public filings made with the Securities and Exchange Commission, including its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.
FOR ADDITIONAL INFORMATION PLEASE CONTACT:
CTI Industries Corporation
Chief Executive Officer
Investor Relations Contact:
(212) 389-9782 x 101
SOURCE: CTI Industries
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