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Rekor Announces Early Redemption of Senior Secured Notes, Strengthening Company's Financial Position

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Rekor Systems, Inc. (REKR) announces the early redemption of all outstanding Senior Secured Notes, totaling $12.5 million, to strengthen its balance sheet and remove a first priority lien on assets. The redemption, funded partly by a recent public offering, includes $1.875 million in unregistered common shares. Rekor's CEO views this as a significant step to enhance shareholder value and financial flexibility.
Positive
  • Rekor Systems, Inc. commits to strengthening its balance sheet by redeeming all $12.5 million of outstanding Senior Secured Notes.
  • The redemption removes a first priority lien on all the Company's assets, providing greater operational freedom and financial flexibility.
  • A portion of the proceeds from a recent public offering is allocated to the repayment of the SSNs, with holders receiving $1.875 million of the redemption price in the form of 750,000 unregistered common shares at $2.50 per share.
  • Rekor's CEO, Robert A. Berman, who is a holder of the SSNs, sees this redemption as a significant milestone for the company.
  • The CFO, Eyal Hen, believes that clearing the balance sheet of secured debt will enhance shareholder value and position the company better for strategic growth opportunities.
Negative
  • None.

The early redemption of Senior Secured Notes (SSNs) by Rekor Systems represents a strategic financial decision aimed at improving the company's balance sheet. By allocating proceeds from a recent public offering to retire these debts, Rekor is effectively reducing its interest expenses. This move signals to investors and stakeholders that the company is prioritizing financial health and is managing its capital structure proactively.

From a financial perspective, the conversion of part of the redemption price into unregistered common shares dilutes existing shareholders but also serves as a non-cash alternative to conserve cash reserves. The decision to issue shares at $2.50 each to SSN holders, including the company's CEO, indicates a potential discount to the market price, which is a common practice to incentivize debt holders to agree to early redemption.

The improved financial flexibility may lead to an uptick in the company's stock as markets often react positively to reductions in debt levels and interest costs. However, potential investors should be aware of the dilutive effect of the new shares on earnings per share (EPS).

Rekor Systems operates in the roadway intelligence technology sector, which is highly competitive and capital intensive. By redeeming its SSNs early and removing the first priority lien on its assets, Rekor is enhancing its ability to invest in strategic growth opportunities. The sector is evolving rapidly with significant investments in smart city infrastructure and autonomous driving technology and financial agility is crucial for Rekor to remain competitive.

The company's move to clear its balance sheet of secured debt can also be seen as a step towards making itself a more attractive partner or acquisition target. Companies with strong, unencumbered balance sheets are generally viewed more favorably in strategic negotiations. Rekor's actions may therefore have implications not only for its own growth but also for its positioning within the industry ecosystem.

The issuance of unregistered common shares as part of the debt redemption process is subject to securities regulation. In the United States, such shares are typically exempt from registration under the Securities Act of 1933, pursuant to private placement exemptions. This implies that the shares cannot be sold immediately in the public market without registration or an applicable exemption.

For shareholders, this has implications regarding the liquidity of these new shares. The legal intricacies of unregistered securities also mean that the company must navigate compliance with both federal and state securities laws, which can be complex. The involvement of the company's CEO as a holder of SSNs and a recipient of these shares adds another layer of scrutiny, as transactions involving company insiders are closely monitored for compliance with insider trading regulations.

COLUMBIA, MD / ACCESSWIRE / February 26, 2024 / Rekor Systems, Inc. (NASDAQ:REKR) ("Rekor" or the "Company"), a leader in developing and implementing state-of-the-art roadway intelligence technology, today announced its decision to early redeem all $12,500,00 of its outstanding Senior Secured Notes ("SSNs"). This reflects the Company's commitment to strengthening its balance sheet and removes a first priority lien on all the Company's assets. The redemption of all outstanding SSNs is expected to occur on March 4, 2024.

A portion of the proceeds of a recent public offering were allocated to the repayment of the SSNs and holders of the SSNs also agreed to receive $1,875,000 of the redemption price in the form of 750,000 unregistered common shares at $2.50 per share. Robert A. Berman, Rekor's Chairman and CEO, is one of the holders of the SSNs.

Eyal Hen, Rekor CFO, commented on the redemption, stating, "The early redemption of our Senior Secured Notes will be a significant milestone for Rekor. It frees our assets from all encumbrances and significantly reduces our interest expense. Clearing our balance sheet of secured debt will provide us with greater operational freedom and financial flexibility and positions us better to pursue strategic growth opportunities. This is part of our ongoing efforts to enhance shareholder value and is in line with our commitment to maintaining a strong and healthy financial foundation."

About Rekor Systems, Inc.

Rekor Systems, Inc. (NASDAQ: REKR) is a leader in developing and implementing state-of-the-art roadway intelligence systems using AI enabled computer vision and machine learning. As a pioneer in the implementation of digital infrastructure, Rekor is collecting, connecting, and organizing the world's mobility data - laying the foundation for a digitally-enabled operating system for the roadway. With our Rekor One® Roadway Intelligence Engine at the foundation of our technology, we aggregate and transform trillions of data points into intelligence through proprietary computer vision, machine learning, and big data analytics that power our platforms and applications. Our solutions provide actionable insights that give governments and businesses a comprehensive picture of roadways while providing a collaborative environment that drives the world to be safer, greener, and more efficient. To learn more, please visit our website: https://rekor.ai, and follow Rekor on social media on LinkedIn, Twitter, Threads, and Facebook.

Forward-Looking Statements

This press release and its links and attachments contain statements concerning Rekor Systems, Inc. and its future expectations, plans, and prospects that constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding the impact of Rekor's core suite of technology products and the size and shape of the global market for its services. Such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements that are not statements of historical fact may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terms such as "may," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential," or "continue," by the negative of these terms or by other similar expressions. You are cautioned that such statements are subject to many risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including the risk that actual circumstances, events or results may differ materially from those projected in the forward-looking statements, particularly as a result of various risks and other factors identified in our filings with the Securities and Exchange Commission. All forward-looking statements contained in this press release speak only as of the date on which they were made and are based on management's assumptions and estimates as of such date. We do not undertake any obligation to publicly update any forward-looking statements, whether as a result of the receipt of new information, the occurrence of future events, or otherwise.

Media & Investor Relations Contact:
Rekor Systems, Inc.
Charles Degliomini
ir@rekor.ai

SOURCE: Rekor Systems, Inc.



View the original press release on accesswire.com

Rekor Systems, Inc. (REKR) is announcing the early redemption of all $12.5 million of its outstanding Senior Secured Notes to strengthen its balance sheet and remove a first priority lien on assets.

The redemption of the Senior Secured Notes is funded partly by a recent public offering, with a portion of the proceeds allocated to the repayment of the SSNs.

Holders of the SSNs are receiving $1.875 million of the redemption price in the form of 750,000 unregistered common shares at $2.50 per share.

Robert A. Berman, Rekor's Chairman and CEO, who is also a holder of the SSNs, views the early redemption as a significant milestone for the company.

Rekor's CFO, Eyal Hen, believes that clearing the balance sheet of secured debt will enhance shareholder value, provide greater operational freedom, and position the company better for strategic growth opportunities.
Rekor Systems Inc

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rekor systems, inc., through its subsidiaries, provides vehicle identification and management systems based on artificial intelligence in the united states, canada, and internationally. the company operates in two segments, technology and professional services. it offers openalpr software, a vehicle recognition software. the company provides vehicle recognition and data management products and services; traffic safety systems, including hardware that identifies red light and school safety zone traffic violations, as well as software, which captures and offers forensic quality images and data, and supports citation management services; and enterprise parking enforcement solutions. it also offers government contracting support services, such as market intelligence and opportunity identification, capture and strategic advisory, proposal strategy and development, teaming support, and managed human capital. in addition, the company provides specialty staffing services, including specialized