Boston, MA 07/01/2014 (wallstreetpr) – Body Central Corp (NASDAQ:BODY) will cease trading on NASDAQ stock exchange after the company violated exchange regulations in pursuit of a loan to keep it afloat. The move to delist from NASDAQ is voluntary, the company said in a press release.
While the company has announced its plans to voluntarily stop trading on NASDAQ, it is not yet clear where it plans to trade next.
Loan funding
The company recently raised $18 million in loan through a private placement of convertible notes. While such a form of loan is allowed, the company failed to first seek the approval of its stockholders before the loan acquisition. The company said in a press release that it needed the money as a matter of urgency to stay in business. However, the failure to obtain approval before going ahead with securing of the loan saw the company go against trade regulations, thus its voluntary delisting from NASDAQ.
Loan terms
Body Central Corp (NASDAQ:BODY) allowed three of its loan investors to have a seat in its board of directors.
The company announced that the notes are convertible into common stock shares at any time that holders choose to exercise the option. The conversion price of the notes to common stock is $0.35.
Unless converted into common stock, all the loan amount will be payable in cash on the third anniversary.
Body Central Corp (NASDAQ:BODY) announced plans to seek the approval of its stockholders to perform a reverse stock split within 90 days.
Poor performance
For several months, Body Central Corp (NASDAQ:BODY) has been on a downward spiral whereby it has been closing stores to reduce its financial burden while shoring up the balance sheet. It closed 12 stores in 1Q. Following the disappointing 1Q performance that saw the company losing $9.3 million, executives agreed to take pay cuts in what appeared as part of a broader austerity measure in the company.
Although shares of Body Central Corp (NASDAQ:BODY) traded around $13 a year ago, the shares have dropped to trade around $0.89 apiece.
