Deal Maker of the Year Awards 2012 The Interview
Kirkland
providers such as lawyers, accountants, landlords and investor relations firms, as well as products suppliers, manufacturers, equipment dealers and other key vendors. The LIFE program can renew and strengthen vendor relationships. Ironridge can also repay promissory notes, debentures and outstanding loan balances.
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Cereplast recently raised $5m from Ironridge. Can you discuss
the transaction?
It was gratifying to have the opportunity to facilitate the development, production and distribution of products with the disruptive potential to significantly improve our global environment. Good business and good corporate citizenship do not need to be mutually exclusive.
Cereplast designs and manufactures proprietary biobased, sustainable bioplastics which are used as substitutes for traditional plastics in all major converting processes, such as injection molding, thermoforming, blow molding and extrusions, at a pricing structure that is competitive with traditional plastics. Cereplast’s compostable resins are especially advantageous in the food service industry, and its sustainable resins have the durability of traditional plastic for use in applications such as automotive, consumer electronics and packaging.
Ironridge Global’s investment in Cereplast will provide the company with access to liquidity to help resolve its accounts receivable issues, monetize its receivables, and also re-start its production schedule and access necessary raw materials. The transaction will enable the company to make progress with its strategic plan to distribute its inventory, work with interested parties in the U.S., Europe and India seeking supplies of product, build working relationships with new customers, and monetize successful trials of products in housewares, construction and packaging.
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onridge Global Partners, LLC Q
Were there any challenges that needed to be overcome?
Yes. The market reacted well to the benefits our transaction, and after closing the company’s share stock price increased by about 60%.
Unfortunately, Cereplast subsequently entered into a structured financing with an alternative investment firm, and the stock has since performed poorly. However, Ironridge seeks to be a long-term financial partner, and we remain fully supportive of management and their on-going efforts to maximize shareholder value.
What is the focus and strategy for the fund?
Ironridge Global Partners brings traditional private equity financial sophistication to small cap public companies. We have developed processes enabling us to quickly structure flexible financial solutions based upon each company’s unique situation, perform expedited due diligence, make decisions and close transactions quickly and efficiently.
Transactions completed with Ironridge are far superior to traditional registered directs, PIPES or equity lines, which frequently cause an immediate drop in market cap of 20% to 40% or more. Ironridge Global is not a hedge fund, and does not require onerous restrictive covenants that can severely limit a company’s ability to operate on a going forward basis. Nor does Ironridge typically receive any warrants, which can create problematic overhang and misalign the investor’s interests with those of the common shareholders.
Ironridge Global is also not a venture capital firm, and does not desire to influence or control management. We do not restrict use of proceeds, and will never take an affiliate or control position in companies. In most cases Ironridge will agree never to exercise preemptive rights or vote against management in any context. We act as a
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passive capital partner, exclusively placing its trust in current management with strong vision for accelerated growth and increased shareholder value.
2011 saw global economic turmoil; do you think this has impacted on your 2012/2013 strategy?
The current environment has made it much more challenging for small cap and micro cap public companies to obtain needed financing. We view this as a significant investment opportunity for Ironridge Global, since we often will finance companies that have been unable to obtain funding from traditional sources.
Is there anything else you would like to mention?
Ironridge Global is fully funded and is not accepting additional investments.
Ironridge does not accept additional capital from outside third parties, and is the sole participant in vast majority of its financing transactions. Because Ironridge Global Partners is not dependant on syndicates or third party financing, the firm is uniquely positioned to structure, negotiate and execute transactions in a timely manner with a high degree of certainty.
Contact: John C. Kirkland Managing Director Ironridge Global Partners, LLC Tel: +1-310-995-3900 Email: jkirkland@ironridgeglobal.com