Publicly traded recruiting firm GEE Group (ticker GEE) has negotiated a major balance sheet restructuring: “Approximately $47.4 million, which is comprised of approximately $19.7 million of subordinated debt and approximately $27.7 million of preferred stock mezzanine financing, was eliminated from the Company’s balance sheet as of June 30, 2020, at a substantial discount in exchange for cash of approximately $5.1 million inclusive of accrued interest and the issuance of approximately 1.8 million of GEE Group Inc. restricted common shares“.
As far as we can tell that leaves the troubled business – which just recently received a PPP loan/grant, with a $41mn Term Loan, judging from the latest 10-Q. Most importantly at this time of much reduced business activity, the company claims to have $16.4mn in cash.
To date, the BDC Credit Reporter has rated the company CCR 3, a rating we maintain post-restructuring. Even $16.4mn in cash is no great protection in these difficult times and the business is far from being out of the woods. Don’t expect a great increase in the company’s fair market value which had been barely discounted in the IQ 2020 results from a cost of $11.1mn to a FMV of $10.2mn. The only lender involved is Investcorp Credit Management (ICMB), which holds a quarter of the Term Loan.
We get the impression that there will be more twists and turns in the GEE Group corporate history and before the 3/21/2021 Term Loan due date, but for a brief moment here the news was good thanks to this restructuring. Given this is a public company, we’ll be learning a lot more in the months ahead about GEE Group’s attempt to return to normal “performing” status in the months ahead.