Gaucho Group Holdings, Inc. (NASDAQ:VINO), a real estate and construction company currently trading at $0.42 near its 52-week low, has announced the private placement of equity securities, including Senior Convertible Preferred Stock and promissory notes, in a filing with the Securities and Exchange Commission (SEC) today.
The private placement aims to raise up to $7.2 million in capital for the company's operations. InvestingPro data shows the company maintains a healthy balance sheet with more cash than debt, suggesting strategic timing for this capital raise.
The Board of Directors of Gaucho Group approved the issuance of shares of Preferred Stock and 8.5% promissory notes to raise funds under Section 4(a)(2) of the 1933 Act and Rule 506(b) of Regulation D. The Preferred Stock is priced at $100 per share, with an initial limit set to 6,731 shares, amounting to $637,100 in gross proceeds, pending stockholder approval. With a current market capitalization of $23.7 million and a strong current ratio of 1.8, the company demonstrates solid financial footing for this offering.
Following approval at the Annual General Meeting on August 16, 2024, notes totaling $3,306,425 and accrued interest of $21,243 were converted into 33,286 shares of Preferred Stock. Additionally, between August 19, 2024, and November 12, 2024, the company issued 10,284 shares of Preferred Stock, resulting in gross proceeds of $1,028,307.
The private placement targeted a small group of accredited investors with whom the company has pre-existing relationships, and no general solicitation was used. No commissions were paid in connection with these transactions, which were conducted in compliance with the exemptions from registration provided under Section 4(a)(2) and Rule 506(b) of Regulation D of the Securities Act.
The issuance of these securities is part of Gaucho Group's strategy to secure additional funding for its business activities. This move is detailed in the company's 8-K filing and is based on the Certificate of Designation filed with the SEC on May 22, 2024. The company's actions reflect its efforts to strengthen its financial position without involving public offerings or general solicitation.
According to InvestingPro analysis, VINO appears undervalued with an impressive free cash flow yield of 31%. Subscribers can access 8 additional exclusive ProTips and comprehensive financial metrics at InvestingPro.
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