A New York hedge fund has increased its stake in Waitr amid the Lafayette-based delivery service app’s attempts to shift its business strategies and find a more solid financial footing as its days on the stock market may be numbered.
Luxor Capital Group bumped its ownership from about 10% to 17% through a debt-for-equity exchange, according to federal filings and company statements. The hedge fund loaned Waitr $60 million in 2018.
The deal comes at a time when Waitr — soon to be rebranded as ASAP following a trademark dispute — is expanding its delivery services to apparel, sporting goods, auto parts and more.
“This agreement signifies a tremendous vote of confidence in our company, management and the future strategy of the business,” Carl Grimstad, CEO and chairman of Waitr Holdings Inc., said in a statement. “We are excited about our outlook as we continue to transition to the ‘Deliver Anything ASAP’ business model, along with our rebrand as ASAP.”
What the move will do for Waitr’s sagging stock price is unclear. Waitr officials did not respond to a request for comment.
Following a COVID-19 pandemic bump, Waitr’s stock has been on a turbulent ride for months. The company’s share price has been trending downward since October, when it hit a recent high of $2.05.
Shares of Waitr closed Monday at 30 cents, down 2 cents, or 6.9%.
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The price has been below Nasdaq’s minimum requirement of $1 since December. Companies that trade on Nasdaq must maintain a $1 price or higher for at least 30 days to avoid penalty, including possible delisting.
According to federal filings, Waitr had until Monday to raise the price above $1 for at least a 10-day stretch to avoid being delisted. Shareholders in June rejected a proposed reverse stock split to raise Waitr’s price.
The company fended off a similar delisting threat in 2019.
When Waitr Holdings went public in 2018, Luxor loaned the company $60 million through a kind of debt called convertible notes. Convertible note agreements allow borrowers to convert debt into stock for their lenders.
According to a Monday filing with the Securities and Exchange Commission, Waitr and Luxor agreed to convert about $6.75 million of Waitr’s outstanding loan into stock for Luxor’s ownership. The two sides inked a similar debt-for-equity swap for $750,000 in May.
Under the initial agreement the two sides signed in 2018, Waitr could only give Luxor a maximum 9.9% ownership stake through any kind of debt-for-equity swap. But that cap was raised to 17%, according to the SEC filing.
In May, Waitr paid off about $20 million of its debt to Luxor, reducing its outstanding debt to the hedge fund from about $35 million to $15 million.