Nauticus Robotics Debtholders Agree to Exchange $33M of Debt to Equity

Rhea-AI Summary

Nauticus Robotics (NASDAQ: KITT) has secured an agreement with existing debtholders to convert $33M of debt into equity through a preferred stock exchange. The company expects this conversion to significantly reduce its balance sheet leverage and potentially resolve previously reported NASDAQ compliance issues. The existing convertible debenture will be exchanged for a new class of convertible preferred stock.

Positive

• Debt reduction of $33M through conversion to equity
• Potential resolution of NASDAQ compliance issues
• Balance sheet deleveraging

Negative

• Shareholder dilution due to debt-to-equity conversion
• Existing NASDAQ compliance issues

Insights

Financial Restructuring Specialist

This debt-to-equity conversion represents a significant financial restructuring that substantially improves Nauticus Robotics' balance sheet health. Converting $33M of debt to preferred stock eliminates interest payment obligations and strengthens the company's capital structure. This move addresses two critical issues:

• Immediate deleveraging of the balance sheet, improving financial flexibility
• Potential resolution of NASDAQ compliance concerns, reducing delisting risk

The conversion to preferred stock, while dilutive to existing shareholders, provides breathing room for operational execution without immediate debt service pressure. This restructuring suggests strong creditor confidence in the company's long-term prospects, as debtholders are willing to take an equity position rather than demand repayment.

Robotics Industry Analyst

The debt restructuring comes at a important time for Nauticus as the subsea robotics market shows growing demand. The company's focus on autonomous systems and AI-driven solutions positions it well in the evolving offshore industry. The improved balance sheet should enable Nauticus to:

• Accelerate development and deployment of its autonomous robot fleet
• Expand its service offering in the subsea infrastructure maintenance sector
• Invest in AI and software capabilities for third-party platform integration

The shift from debt to equity financing suggests management's confidence in achieving positive operational cash flow from their robotics-as-a-service model.

HOUSTON, Nov. 5, 2024 /PRNewswire/ -- Nauticus Robotics, Inc. (NASDAQ: KITT), a leading innovator in autonomous subsea robotics and software, announces that it has entered into an agreement with existing debtholders to convert $33M dollars of debt into equity through a preferred stock exchange. The company anticipates that this exchange will allow the company to substantially deleverage the balance sheet and believes that it would resolve NASDAQ compliance issues previously reported. The existing convertible debenture will be exchanged for a new class of convertible preferred stock.

About Nauticus Robotics

Nauticus Robotics, Inc. develops autonomous robots for the ocean industries. Autonomy requires the extensive use of sensors, artificial intelligence, and effective algorithms for perception and decision allowing the robot to adapt to changing environments. The company's business model includes using robotic systems for service, selling vehicles and components, and licensing of related software to both the commercial and defense business sectors. Nauticus has designed and is currently testing and certifying a new generation of vehicles to reduce operational cost and gather data to maintain and operate a wide variety of subsea infrastructure. Besides a standalone service offering and forward-facing products, Nauticus' approach to ocean robotics has also resulted in the development of a range of technology products for retrofit/upgrading traditional ROV operations and other third-party vehicle platforms. Nauticus' services provide customers with the necessary data collection, analytics, and subsea manipulation capabilities to support and maintain assets while reducing their operational footprint, operating cost, and greenhouse gas emissions, to improve offshore health, safety, and environmental exposure. 

Cautionary Language Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Act"), and are intended to enjoy the protection of the safe harbor for forward-looking statements provided by the Act as well as protections afforded by other federal securities laws. Such forward-looking statements include but are not limited to: the expected timing of product commercialization or new product releases; customer interest in Nauticus' products; estimated operating results and use of cash; and Nauticus' use of and needs for capital. Generally, statements that are not historical facts, including statements concerning possible or assumed future actions, business strategies, events, or results of operations, are forward-looking statements. These statements may be preceded by, followed by, or include the words "believes," "estimates," "expects," "projects," "forecasts," "may," "will," "should," "seeks," "plans," "scheduled," "anticipates," "intends," or "continue" or similar expressions. Forward-looking statements inherently involve risks and uncertainties that may cause actual events, results, or performance to differ materially from those indicated by such statements. These forward-looking statements are based on Nauticus' management's current expectations and beliefs, as well as a number of assumptions concerning future events. There can be no assurance that the events, results, or trends identified in these forward-looking statements will occur or be achieved. Forward-looking statements speak only as of the date they are made, and Nauticus is not under any obligation and expressly disclaims any obligation, to update, alter, or otherwise revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law. Readers should carefully review the statements set forth in the reports which Nauticus has filed or will file from time to time with the Securities and Exchange Commission (the "SEC") for a more complete discussion of the risks and uncertainties facing the Company and that could cause actual outcomes to be materially different from those indicated in the forward-looking statements made by the Company, in particular the sections entitled "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" in documents filed from time to time with the SEC, including Nauticus' Annual Report on Form 10-K filed with the SEC on April 10, 2024. Should one or more of these risks, uncertainties, or other factors materialize, or should assumptions underlying the forward-looking information or statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated, or expected. The documents filed by Nauticus with the SEC may be obtained free of charge at the SEC's website at www.sec.gov.

View original content to download multimedia:https://www.prnewswire.com/news-releases/nauticus-robotics-debtholders-agree-to-exchange-33m-of-debt-to-equity-302296575.html

SOURCE Nauticus Robotics, Inc.

FAQ

What is the value of debt being converted to equity in Nauticus Robotics (KITT)?

Nauticus Robotics is converting $33 million of debt into equity through a preferred stock exchange.

How will the debt conversion affect Nauticus Robotics (KITT) NASDAQ compliance?

The company anticipates that the debt-to-equity conversion would resolve previously reported NASDAQ compliance issues.

What type of stock will Nauticus Robotics (KITT) issue for the debt conversion?

Nauticus Robotics will exchange the existing convertible debenture for a new class of convertible preferred stock.