RYVYL Executes NEW MOU with Securityholder to Retire 8% Senior Convertible Note and Series B Convertible Preferred Stock

Rhea-AI Summary

RYVYL Inc. (NASDAQ: RVYL) has entered into a new non-binding Memorandum of Understanding (MOU) with a securityholder to retire debt instruments. The agreement includes:

- A first tranche payment of $13.0 million to redeem all Series B Convertible Preferred Stock and partially pay an 8% Senior Convertible Note, leaving a $4.0 million balance

- The remaining $4.0 million balance will have an advanced maturity date of April 30, 2025

The company must execute definitive agreements and pay the first tranche by January 27, 2025, or the MOU expires. RYVYL can extend this deadline to February 3, 2025, for an additional $50,000. Upon payment, certain restrictive covenants will be waived, contingent on paying the remaining balance by April 30, 2025. Until the first payment, the securityholder retains conversion rights for both instruments.

Positive

• Potential reduction of debt obligations through retirement of convertible note and preferred stock
• Opportunity to remove restrictive covenants upon completion of payments
• Structured payment plan with clear timeline for debt resolution

Negative

• Significant cash outlay required ($13 million) by January 27, 2025
• Risk of MOU expiration if payment deadline not met
• Possibility of restrictive covenants returning if final payment not made by April 30, 2025

Insights

Financial Analyst

This debt restructuring agreement represents a critical financial maneuver for RYVYL, with significant implications for its capital structure and future operations. The company is attempting to address $17 million in outstanding obligations through a two-phase approach: an immediate $13 million payment followed by a $4 million balance due by April 2025.

The extremely tight execution timeline - just 5 days until January 27th - suggests urgency in securing funding, which raises questions about the company's current liquidity position. The fact that RYVYL included a short extension option for a relatively small $50,000 fee further indicates potential challenges in arranging immediate financing.

A important aspect of this deal is the temporary waiver of restrictive covenants upon making the first payment. This could provide RYVYL with much-needed operational flexibility and the ability to pursue strategic initiatives that may have been previously restricted. However, the risk of these covenants snapping back into place if the April 2025 payment is missed creates a significant incentive to complete the full redemption.

For shareholders, there are mixed implications. While debt reduction is positive for the company's financial health, the securityholder's retained ability to convert both the note and preferred stock into common shares until the first payment creates near-term dilution risk. Given RYVYL's current market cap of about $10.5 million, any significant conversion could substantially impact the share price.

The success of this restructuring hinges entirely on RYVYL's ability to secure $13 million in financing within days - a substantial amount relative to its market capitalization. This suggests the company may need to pursue multiple funding sources or consider asset sales to meet these obligations.

SAN DIEGO, CA, Jan. 22, 2025 (GLOBE NEWSWIRE) -- RYVYL Inc. (NASDAQ: RVYL) ("RYVYL" or the "Company"), a leading innovator of payment transaction solutions leveraging proprietary blockchain ledger and electronic payment technology for diverse international markets, has entered into a new non-binding Memorandum of Understanding with a securityholder of the Company, replacing a previously announced Memorandum of Understanding, which expired on November 29, 2024 (the “New MOU”) for the full repayment and termination of an 8% Senior Convertible Note (the “Note) and the redemption of all shares of the Company’s Series B Convertible Preferred Stock (the “Preferred Stock”). The New MOU provides for:

• A first tranche payment of $13.0 million for the redemption of all of the shares of Preferred Stock held by the Securityholder, and payment of a portion of the outstanding balance of the Note so that the remaining outstanding principal balance will be $4.0 million.
• Advancing the maturity date for the remaining balance of $4.0 million due under the Note, following payment of the first tranche, to April 30, 2025.

The Company is required to execute definitive agreements with the Securityholder (the “Definitive Agreements”) and pay the first tranche payment of $13.0 million on or before January 27, 2025, or the New MOU will expire and the transactions contemplated under the New MOU will not be completed. The first tranche due date may be extended to February 3, 2025, at the sole option of the Company, in consideration for RYVYL’s payment of an additional $50,000.

• Upon payment of the first tranche payment and execution of the Definitive Agreements, certain restrictive covenants contained in the transaction documents pursuant to which the Note and the shares of Preferred Stock were issued will be waived, as long as the Company pays the remaining $4.0 principal balance of the Note ($4,050,000, if the date of the first tranche payment date is extended) on or before April 30, 2025. If the Company fails to pay the remaining balance by such date, all restrictive covenants will go back into effect.
• Prior to payment of the first tranche payment, the Securityholder shall retain the ability, subject to certain market limitations, to convert the Note and the Preferred Stock into common stock.

This communication is for informational purposes only and does not constitute an offer to sell, or a solicitation of an offer to buy, any security and does not constitute an offer, solicitation or sale of any security in any jurisdiction in which such offer, solicitation or sale would be unlawful.

About RYVYL

RYVYL Inc. (NASDAQ: RVYL) was born from a passion for empowering a new way to conduct business-to-business, consumer-to-business, and peer-to-peer payment transactions around the globe. By leveraging proprietary blockchain ledger and electronic payment technology for diverse international markets, RYVYL is a leading innovator of payment transaction solutions reinventing the future of financial transactions. Since its founding as GreenBox POS in 2017 in San Diego, RYVYL has developed applications enabling an end-to-end suite of turnkey financial products with enhanced security and data privacy, world-class identity theft protection, and rapid speed to settlement. As a result, the platform can log immense volumes of immutable transactional records at the speed of the internet for first-tier partners, merchants, and consumers around the globe. www.ryvyl.com

Cautionary Note Regarding Forward-Looking Statements

This press release includes information that constitutes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on the Company's current beliefs, assumptions, and expectations regarding future events, which in turn are based on information currently available to the Company. Such forward-looking statements include statements regarding the timing and expectation of revenues from the license described herein and are charactered by future or conditional words such as "may," "will," "expect," "intend," "anticipate," "believe," "estimate" and "continue" or similar words. You should read statements that contain these words carefully because they discuss future expectations and plans, which contain projections of future results of operations or financial condition or state other forward-looking information. By their nature, forward-looking statements address matters that are subject to risks and uncertainties. A variety of factors could cause actual events and results to differ materially from those expressed in or contemplated by the forward-looking statements, including the risk that the licensee understands and complies with various banking laws and regulations that may impact the licensee's ability to process transactions. For example, federal money laundering statutes and Bank Secrecy Act regulations discourage financial institutions from working with operators of certain industries - particularly industries with heightened cash reporting obligations and restrictions - as a result of which, banks may refuse to process certain payments and/or require onerous reporting obligations by payment processors to avoid compliance risk. These and other risk factors affecting the Company are discussed in detail in the Company's periodic filings with the SEC. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether because of the latest information, future events or otherwise, except to the extent required by applicable laws.

IR Contact:
David Barnard, Alliance Advisors Investor Relations, 415-433-3777, ryvylinvestor@allianceadvisors.com

FAQ

What is the total amount RVYL needs to pay to retire its debt under the new MOU?

RVYL needs to pay a total of $17 million: $13 million in the first tranche and $4 million as the remaining balance by April 30, 2025.

When does RVYL need to make the first payment under the new debt retirement MOU?

RVYL must make the first tranche payment of $13 million by January 27, 2025, with an option to extend to February 3, 2025, for an additional $50,000 fee.

What happens if RVYL fails to pay the remaining $4 million by April 30, 2025?

If RVYL fails to pay the remaining balance by April 30, 2025, all previously waived restrictive covenants will go back into effect.

Can the securityholder still convert RVYL's note and preferred stock before the first payment?

Yes, the securityholder retains the ability to convert both the Note and Preferred Stock into common stock, subject to market limitations, until the first tranche payment is made.