Wheeler Real Estate Investment Trust: issues 161,700 common shares for preferred stock

What happened The filing says the company agreed to issue an aggregate 161,700 shares of its common stock to Stilwell Activist Investments, L.P. and Stilwell Activist Fund, L.P. in separate exchanges for an aggregate 30,800 shares of Series B preferred stock and 7,700 shares of Series D preferred stock. The filing says the transactions involved issuance of 21 shares of common stock in exchange for 4 shares of Series B preferred stock and 1 share of Series D preferred stock, settled in accordance with customary settlement cycles, and that the company received no cash proceeds and the exchanged preferred shares were retired and cancelled.

The filing says, in connection with October redemptions of Series D preferred stock, the lowest price at which any Series D preferred stock was converted into common stock was approximately $4.96, and pursuant to Section 14.02 (Optional Conversion) of the indenture governing the company’s 7.00% Subordinated Convertible Notes due 2031, the conversion price for the notes was adjusted to approximately $2.73 per share (approximately 9.17 shares of common stock for each $25.00 of principal), representing a 45% discount to $4.96.

Key details

• 161,700 shares of common stock issued in exchange for 30,800 shares of Series B preferred stock and 7,700 shares of Series D preferred stock.
• Joseph Stilwell, a member of the company’s board of directors, is the managing member and owner of Stilwell Value LLC, the general partner of the Stilwell Investors.
• The company did not receive cash proceeds; the exchanged preferred shares were retired and cancelled; issuance relied on the Section 3(a)(9) exemption of the Securities Act.
• Conversion price for the 7.00% Subordinated Convertible Notes due 2031 was adjusted to approximately $2.73 per share (about 9.17 shares per $25.00 principal) following the October Series D conversions; lowest Series D conversion price was approximately $4.96.

Why it may matter Item 3.02 reports unregistered sales of equity securities (exchange of preferred stock for common stock). Item 3.03 reports a material modification to the rights of security holders related to the company’s 7.00% Subordinated Convertible Notes due 2031. Item 8.01 reports other events, including the conversion price adjustment to approximately $2.73 per share pursuant to the notes indenture following October redemptions. The filing does not show why the insider traded or why the company acted.