Lifecore Biomedical: Special Stockholder Meeting to Remove Convertible Preferred Stock Exchange Cap

Lifecore Biomedical, Inc. (NASDAQ: LFCR), a fully integrated contract development and manufacturing organization (CDMO), has announced its intention to hold a special meeting of stockholders on April 10, 2025. The purpose of the meeting is to consider and vote on a proposal to approve the issuance of shares of its common stock, par value $0.001 per share, issuable upon conversion of shares of Lifecore’s Series A Convertible Preferred Stock, par value $0.001 per share, in an amount in excess of 19.99% of the number of shares of the Common Stock outstanding immediately prior to the issuance of such Convertible Preferred Stock.



The proposed removal of the Convertible Preferred Stock Exchange Cap would allow the holders of Convertible Preferred Stock to convert their shares into Common Stock beyond the current limit of 19.99% of the outstanding Common Stock. This move is aimed at accommodating the terms of the Purchase Agreement dated January 9, 2023, and has no immediate plans to raise additional equity capital.



The proposed conversion could have several potential implications on Lifecore's capital structure. First, it could lead to an increase in the number of outstanding shares of Common Stock, which could dilute the ownership and voting power of existing shareholders. Additionally, if the holders of Convertible Preferred Stock choose to convert their shares, it could result in a cash outflow for Lifecore, as it would need to issue new shares of Common Stock to satisfy the conversion. This could potentially impact Lifecore's liquidity and financial position.

However, it is important to note that as of the date of this press release, no holders of Lifecore's Convertible Preferred Stock have elected to convert their shares to Common Stock. Therefore, the actual impact on Lifecore's capital structure would depend on the decisions made by the holders of Convertible Preferred Stock.

The proposed conversion of Series A Preferred Stock could also impact Lifecore's future financing options. The conversion would increase the number of outstanding shares of common stock, which could dilute the ownership and voting power of existing shareholders. This dilution could make it more difficult for Lifecore to raise additional capital through equity offerings in the future, as potential investors may be less interested in purchasing a smaller percentage of the company. Additionally, the conversion could potentially trigger covenants in Lifecore's existing debt agreements that limit the issuance of additional equity, making it more difficult for Lifecore to raise debt financing in the future. Finally, the conversion could potentially cause Lifecore's stock price to decline, making it more difficult for the company to raise capital through public offerings, or even cause the company to be delisted from public stock exchanges.

In conclusion, Lifecore's decision to hold a special stockholder meeting is driven by strategic reasons related to its Convertible Preferred Stock and the potential conversion of Series A Preferred Stock. While the proposed conversion could provide Lifecore with additional capital, it could also have significant impacts on the company's capital structure and future financing options, depending on the specific terms of the conversion and the company's existing financing agreements. Investors should carefully consider the potential implications of the proposed conversion before making any investment decisions.