TOP SHIPS Inc (NASDAQ:TOPS)
TOP SHIPS Inc (NASDAQ:TOPS) stock dropped over 17% and ended the trading day at $0.72 on volume that was over three times normal. TOPS stock has struggled to remain over the $1 per share level which serves not only as a psychological level, but is also a key level to maintain NASDAQ compliance.
The Board of Directors for Greek-based TOP SHIPS Inc (NASDAQ:TOPS) has approved, and enacted, several reverse splits in the last few years. In 2014, there was a 1:7 reverse split, then in 2016 there was a 1:10 reverse stock split. In 2017 there have been four. In May, the reverse split ratio was 1:20, in June it was 1:15, in August the ratio was 1:30, and last month the company ordered a reverse split using a ratio of 1:2.
Taking the reverse splits into account, TOPS stock traded at an astounding $250,000 per share in 2009. The extreme destruction of TOPS shareholder equity is the basis for a number of class-action lawsuits and SEC investigations.
The lawsuits allege that TOP SHIPS Inc (NASDAQ:TOPS) CEO Evangelos J. Pistiolis caused the company to engage in a series of manipulative share issuance and sales transactions with Kalani Investments Limited (“Kalani”) through which Top Ships would sell its common shares and securities convertible into common shares to Kalani at a significant discount to market price and file registration statements so that Kalani could resell these shares into the market. When Kalani’s sales of TOP SHIPS Inc (NASDAQ:TOPS) stock caused its share price to decline, the company would reverse split the stock thereby raising its stock price.
The lawsuits continue to allege that the TOP SHIPS Inc (NASDAQ:TOPS) would continue to manipulate the stock price and lending arrangements by selling additional securities to Kalani. Then the same lending and trading pattern would follow. Allegations state that the company failed to disclose the true purpose of the transactions and related stock issuances and reverses – to finance related-party transactions and acquisitions that primarily benefited Mr. Pistiolis and company insiders.
What is a matter of record is that by August 2017, TOP SHIPS Inc (NASDAQ:TOPS), through Kalani, issued and sold into the market tens of millions of shares of TOPS common stock, vastly diluting shareholder equity. The value of TOPS stock has fallen by more than 99% in the past year.
TOP SHIPS New Debt
On Friday, TOP SHIPS Inc (NASDAQ:TOPS) announced that it will enter into a note purchase agreement for the issuance of a revolving promissory note with Crede Capital Group LLC, a Delaware limited liability company, in the amount of $12.5 million with a single revolving option for an additional $5.0 million note.
According to the press release, the two notes will have a 2-year term and will bear interest at 2% per annum for the first 90 days, 10% per annum for the next 90 days, and 15% per annum for the remaining duration of the term. The notes will be pre-payable at the election of the company at any time, will not be convertible into equity, and will begin to amortize upon their six-month anniversary. Proceeds will be used to expand the company’s fleet and for general corporate purposes.
I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.
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About the author: Marc has a degree in economics and a MSc. in Finance. Over his 20-year career, Marc has worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.