It has a mission of “Building the Kingdom by transforming assets into living water.” Nestled at the intersection of faith and finance, Colorado Springs-headquartered Waterstone has emerged as an entity tied to a larger community of organizations “dedicated to promoting Kingdom values in stewardship, financial management and corporate leadership.”
You are viewing: A Strategic Investment In Salem From A ‘Faith and Finance’ Firm
Led by CEO Ken Harrison, Waterstone has made its mark with Christian-themed charity groups through grants and fundraising. Now, it is a major shareholder of publicly traded Salem Media Group.
It marks an interesting turn for Waterstone, best-described as a faith-based Christian charity consultancy. As first reported by RBR+TVBR and Radio Ink late Monday, Salem on December 23 issued $40 million of newly issued Series B Convertible Preferred Stock to Waterstone, which is formally registered under the name The Christian Community Foundation Inc.
Salem took the $40 million and immediately applied it to its repurchase in full of $159.4 million of the company’s outstanding 7.125% Senior Secured Notes due 2028. This was accomplished through the payment of $104 million in cash and the issuance of an aggregate of $24 million in subordinated unsecured promissory notes to all holders of the 2028 Notes.
In connection with the repurchase, Salem and its debtholders agreed that on a date reflecting the closing of the related sale of seven radio stations to Educational Media Foundation (or no later than June 22, 2025), Salem will exchange all of the Subordinated Notes for 24,000 shares of newly issued Series A Preferred Stock.
See more : Car Finance Market Size, Share
This, says Salem, will have an initial liquidation preference of $1,000 and accrue quarterly dividends, payable in cash or in kind at the option of the company, at a rate of 5% for the first two years after issuance, 7.5% for the following two years, and 10% after the fourth year after issuance, and contains certain mandatory redemption obligations, subject to the prior repayment of Salem’s outstanding senior debt.
Salem says the early payment, which covers all accrued interest, comes at a $37.1 million discount.
For Harrison-led Waterstone, the Series B Preferred Stock it now holds has an initial liquidation preference of $1,000 per share and is convertible into Salem’s Class A and Class B Common Stock at a conversion price based on the trailing 90-day Volume Weighted Average Price of Salem common stock at the time of conversion. But, this is subject to limits that the maximum number of shares issuable on conversion will not exceed 49% of the issued and outstanding shares of the company’s common stock or 46% of Salem’s voting rights.
As of Noon Eastern on Tuesday, Salem Media Group shares were up by more than 114% — to $0.4501. It reflects the severe financial strains seen across 2024 by the company led on a day-to-day basis by CEO Dave Santrella and CFO Evan Masyr; a December 12 closing price of $0.17 marked a fresh 52-week low. SALM, now traded as an over-the-counter stock, hasn’t been priced at this level in one year. Alas, Salem stock has been trading below $1 since mid-May 2023.
Waterstone’s investment in Salem Media Group will be overseen by its Chief Operations Officer and Chief Gift Strategist, Rick von Gnechten.
Von Gnechten’s resume includes roles as CFO and co-COO of Sapere Wealth Management LLC; and as the owner, COO and Managing Director of Ravon Corp.
For 13 years until October 2004, von Gnechten was associated with Hawaiian Electric Company, exiting as Financial VP/CFO.
The investment from Waterstone, and debt reduction come concurrently to the sale of 7 FM radio stations to EMF in a transaction with a total value of $90 million.
Santrella commented, “Upon the closing of these three transactions, we will have transformed and significantly improved Salem’s balance sheet and capital structure. With the exception of its revolving line of credit, Salem will have no outstanding debt. Salem will also have the benefit of working with an important new strategic investor that is expected to bring significant new opportunities to the company as well as offer incredible expertise in the area of digital media. As a result of these transactions, our ability to service our national ministry partners and listeners with the important content provided by Salem has been greatly enhanced.”
Meanwhile, Masyr is concluding 2024 with another debt-reducing move that will certainly attract attention.
In addition to the asset sale, Salem issued EMF a senior secured promissory note due 2027 in the principal amount of $72 million. A portion of the proceeds were used for the repurchase of the 2028 Notes.
Consider it a short-term cash infusion plan: The promissory note will be scrapped upon closing of the $80 million radio station sale.
The EMF note is secured by “substantially all of the assets of the company and certain subsidiary guarantors and will bear interest at 3-month SOFR + 1.00% starting July 1, 2025,” Salem said.
Lastly, an “ABL” extension is now over for Salem.
On December 23, the company completed a one-year lengthening of its Asset Based Loan revolving facility with Siena Lending Group. The Series B Preferred Stock and Subordinated Notes were issued, and the Series A Preferred Stock will be issued, to investors the Company believes to be accredited investors, through private placements.
None of the Series A Preferred Stock, Series B Preferred Stock or Subordinated Notes have been or will be registered under the Securities Act or the securities laws of any other jurisdiction and may not be offered or sold in the United States or to U.S. persons absent registration or an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act or any state securities laws.
Salem retained Guggenheim Securities LLC to serve as its financial advisor in connection with the 2028 Notes Repurchase.
Source link https://rbr.com/a-strategic-investment-in-salem-from-a-faith-and-finance-firm/
Source: https://summacumlaude.site
Category: News
