Aterian Further Strengthens Its Balance Sheet With Extension Of Its Credit Facility

Rhea-AI Summary

Aterian, Inc. extends its asset backed credit facility with MidCap Financial, managed by Apollo Global Management, Inc., until December 2026, providing access to $17.0 million with potential increase to $30.0 million. The extension reduces the minimum liquidity covenant to $6.8 million, strengthening Aterian's balance sheet. Co-CEO and CFO, Arturo Rodriguez, highlights the positive relationship with MidCap Financial and the company's focus on core business stability and growth.

Positive

• Extension of Credit Facility until December 2026.
• Access to $17.0 million with potential increase to $30.0 million.
• Reduction of minimum liquidity covenant to $6.8 million.
• Strengthening of Aterian's balance sheet.
• Positive relationship with MidCap Financial.
• Focus on core business stability and growth.

Negative

• None.

Financial Analyst

The extension of Aterian's asset-backed credit facility with MidCap Financial signifies a strategic maneuver to enhance the company's financial flexibility. The reduction in the minimum liquidity financial covenant from $15.0 million to $6.8 million is particularly noteworthy. This adjustment implies a lower threshold for Aterian to maintain its cash or credit availability, thus easing the company's operational cash flow pressure. The extension fee, being less than $0.1 million, suggests minimal immediate financial burden from this renegotiation.

From a financial perspective, the ability to increase the credit line from $17.0 million to $30.0 million under certain conditions provides Aterian with a cushion for potential growth initiatives or unforeseen expenditures. This is a proactive measure that could support the company's stated goal of achieving adjusted EBITDA profitability in the second half of 2024. For stakeholders, this development could be seen as a positive signal of the company's creditworthiness and the lender's confidence in Aterian's business trajectory.

Market Research Analyst

The extension of the credit facility until December 2026 aligns with Aterian's strategic initiatives to focus and stabilize its core business. This move may be perceived by the market as a vote of confidence from MidCap Financial in Aterian's operational capabilities and future prospects. The renegotiation and extension of credit terms often reflect a company's current market position and projected performance and in this case, it may indicate a stabilization period for Aterian.

For investors, the extension provides a longer-term view of Aterian's financial arrangements, which could potentially reduce the perceived risk associated with the company's stock. It also suggests that Aterian is taking steps to ensure sufficient liquidity to support its operations, which is crucial for maintaining investor confidence, especially in volatile market conditions.

Credit Analyst

The renegotiation of Aterian's credit facility terms with MidCap Financial reflects a comprehensive risk assessment by the lender. Credit analysts would scrutinize the amended liquidity covenant, recognizing that the more favorable terms could be indicative of Aterian's improved liquidity management and risk profile. It is essential to consider how these revised terms compare with industry norms and whether they align with Aterian's business model and financial strategy.

By extending the maturity of the credit facility, Aterian has effectively deferred its debt obligations, potentially improving its short-term solvency ratios. However, it is critical to monitor how this extension impacts the company's long-term debt profile and overall cost of capital. The extended credit facility may also influence Aterian's credit ratings, which could have subsequent effects on borrowing costs and investment appeal.

Credit Facility’s Financial Liquidity Covenant More Favorable

Maturity Extended to December 2026

NEW YORK, Feb. 26, 2024 (GLOBE NEWSWIRE) -- Aterian, Inc. (Nasdaq: ATER) (“Aterian” or the “Company”) today announced that it has extended its asset backed credit facility (“Credit Facility”) with MidCap Financial, which is managed by a subsidiary of Apollo Global Management, Inc.

The Credit Facility term has been extended to December 2026 and gives Aterian access to $17.0 million in current commitments which can be increased, subject to certain conditions, to $30.0 million. The Credit Facility extension reduces the minimum liquidity financial covenant from a peak of $15.0 million to $6.8 million of cash on hand and/or availability in the Credit Facility. The extension fee was less than $0.1 million.

Aterian’s Co-CEO and CFO, Arturo Rodriguez, commented, “We are excited to continue our long-term relationship with MidCap Financial, which started in 2017. MidCap Financial has been impressed by our recent initiatives to focus, simplify and stabilize our core business. This extension level sets the credit facility for 2024 while providing plenty of room for future growth.” Mr. Rodriguez continued, “With the credit facility’s flexibility on our liquidity covenants and, coupled with our existing cash, we have further strengthened Aterian’s balance sheet as we continue on our path towards adjusted EBITDA profitability in the second half of 2024.”

MidCap Financial Portfolio Head of Asset Based Lending, Brett Robinson, commented, “MidCap Financial has a long-standing relationship with the management team at Aterian and we are pleased to extend our existing credit facility with the company as they continue to execute on their business plans.”

About Aterian, Inc.
Aterian, Inc. (Nasdaq: ATER) is a technology-enabled consumer products company that builds and acquires leading e-commerce brands with top selling consumer products, in multiple categories, including home and kitchen appliances, health and wellness and air quality devices. The Company sells across the world's largest online marketplaces with a focus on Amazon and Walmart in the U.S. and on its own direct to consumer websites.

About MidCap Financial
MidCap Financial is a middle-market focused, specialty finance firm that provides senior debt solutions to companies across all industries. As of December 31, 2023, MidCap Financial provides administrative or other services for over $50 billion of commitments*. MidCap Financial is managed by Apollo Capital Management, L.P., a subsidiary of Apollo Global Management, Inc, pursuant to an investment management agreement.

For more information about MidCap Financial, please visit MidCapFinancial.com.

*Including commitments managed by MidCap Financial Services Capital Management LLC, a registered investment adviser, as reported under Item 5.F on Part 1 of its Form ADV

Forward Looking Statements
All statements other than statements of historical facts included in this press release that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements including, in particular, the statements regarding, our goal to achieve adjusted EBITDA profitability in the second half of 2024, future growth, and our initiatives to focus, simplify and stabilize our core business and to reposition Aterian for profitability and growth. These forward-looking statements are based on management’s current expectations and beliefs and are subject to a number of risks and uncertainties and other factors, all of which are difficult to predict and many of which are beyond our control and could cause actual results to differ materially and adversely from those described in the forward-looking statements. These risks include, but are not limited to, those related to our transition away from AIMEE toward a third party technology model, the global shipping disruptions, our ability to continue as a going concern, our ability to meet financial covenants with our lenders, our ability to create operating leverage and efficiency when integrating companies that we acquire, including through the use of our team’s expertise, the economies of scale of our supply chain and automation driven by our platform; those related to our ability to grow internationally and through the launch of products under our brands and the acquisition of additional brands; those related to consumer demand, our cash flows, financial condition, forecasting and revenue growth rate; our supply chain including sourcing, manufacturing, warehousing and fulfillment; our ability to manage expenses, working capital and capital expenditures efficiently; our business model and our technology platform; our ability to disrupt the consumer products industry; our ability to maintain and to grow market share in existing and new product categories; our ability to continue to profitably sell the SKUs we operate; our ability to generate profitability and stockholder value; our ability to maintain the listing of our shares on the Nasdaq Capital Market; international tariffs and trade measures; inventory management, product liability claims, recalls or other safety and regulatory concerns; reliance on third party online marketplaces; seasonal and quarterly variations in our revenue; acquisitions of other companies and technologies and our ability to integrate such companies and technologies with our business; our ability to continue to access debt and equity capital (including on terms advantageous to the Company) and the extent of our leverage; and other factors discussed in the “Risk Factors” section of our most recent periodic reports filed with the Securities and Exchange Commission (“SEC”), all of which you may obtain for free on the SEC’s website at www.sec.gov.

Although we believe that the expectations reflected in our forward-looking statements are reasonable, we do not know whether our expectations will prove correct. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, even if subsequently made available by us on our website or otherwise. We do not undertake any obligation to update, amend or clarify these forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

What is the ticker symbol for Aterian, Inc.?

The ticker symbol for Aterian, Inc. is ATER.

What is the amount of current commitments Aterian has access to through the Credit Facility?

Aterian has access to $17.0 million in current commitments through the Credit Facility, with a potential increase to $30.0 million.

Who manages the Credit Facility for Aterian?

The Credit Facility for Aterian is managed by MidCap Financial, which is a subsidiary of Apollo Global Management, Inc.

What is the minimum liquidity financial covenant after the extension of the Credit Facility?

The minimum liquidity financial covenant after the extension of the Credit Facility has been reduced to $6.8 million.

What was the extension fee for the Credit Facility?

The extension fee for the Credit Facility was less than $0.1 million.