Accuray Inc. Announces $55M Series A Preferred Financing Agreement

What Happened
Accuray Inc. (ARAY) filed an 8-K on July 29, 2026 reporting a Securities Purchase Agreement to sell 55,000 shares of newly designated Series A Convertible Preferred Stock for $55.0 million. The purchase price is structured as $15.0 million in cash at signing and conversion of $40.0 million of existing investor indebtedness into the preferred shares. Closing is conditioned on stockholder approval and implementation of a reverse stock split (between 1-for-15 and 1-for-40, or another Board-approved ratio). The filing also includes an amendment to Accuray’s Financing Agreement, the issuance of new warrants, and two board resignations.

Key Details

• Financing: 55,000 Series A shares at $1,000 each = $55.0M total; $15.0M cash paid at signing + $40.0M debt conversion.
• Series A terms: 8% accruing dividends; liquidation preference = greater of $1,000/share plus unpaid dividends or conversion value; convertible at 2,000 common shares per $1,000 (≈ $0.50/share), adjusted for splits including the required reverse split. Holders have certain consent rights until preferred is satisfied.
• Warrants & governance: Upon closing, roughly 27.6 million existing investor warrants will be cancelled; Accuray issued new warrants to purchase ~15.3 million common shares at $0.01 per share, exercisable for 7 years. The Board size will be reduced to seven and TCW may designate two “Preferred Directors” (Chan W. Galbato and Steven F. Mayer). Two directors (Beverly Huss and Anne LeGrand) resigned effective July 29, 2026.
• Financing amendment: Amendment No. 3 provides a covenant holiday through Dec 31, 2027 for key leverage and coverage ratios, converts the revolver to an asset-based facility, includes fees (including $250,000 amendment fees), and contains a $15.0M fee/obligation if stockholder approval for the Issuance is not obtained.

Why It Matters
This transaction injects near-term capital ($15M cash) and converts $40M of investor debt into preferred equity, reducing leverage but creating a class of preferred shares with significant economic and control protections. The Series A can convert into common stock at a low effective price (≈$0.50 pre-reverse-split), so investors should monitor potential dilution if conversion occurs and the outcome of the required stockholder vote and reverse split. Governance changes (board reduction and preferred-designated directors) and the Financing Agreement amendments shift investor oversight and lending terms, while cancellation of existing warrants and issuance of new warrants materially change future equity overhang and potential upside for holders.