Daktronics Announces Intention to Convert $25 Million Convertible Promissory Note into Common Stock

Core Viewpoint - Daktronics, Inc. has decided to convert an initial $7 million of a $25 million senior second lien secured promissory note into approximately 1.1 million shares of common stock, aiming to optimize its balance sheet and reduce interest expenses [1][4]. Group 1: Company Actions and Financial Performance - The Board will notify Alta Fox of the conversion on November 11, 2024, with a conversion date set for December 3, 2024, and plans to convert the remaining amount in tranches of up to $7 million every 30 days [2]. - Daktronics reported record financial results in fiscal year 2024, with significant increases in revenue, gross profit, and operating income, leading to a stock price increase of over 300% in the last two years and over 175% since the issuance of the Convertible Note [3]. - The decision to convert the Convertible Note aligns with the company's focus on balance sheet optimization, expected to save approximately $5.4 million in interest expenses over the remaining term of the note [4]. Group 2: Convertible Note Details - The Convertible Note, purchased by Alta Fox on May 11, 2023, has a total value of $25 million, due on May 11, 2027, with an interest rate of 9% per annum [6]. - The conversion price for the Convertible Note is set at $6.31, contingent upon the company's stock price meeting specific performance criteria [7]. - Alta Fox has a Maximum Percentage limit of 3% on the amount of common stock it can hold, which affects the timing of share delivery upon conversion [7].