Circle8 cancels $35M convertible note in SPP settlement deal

Circle8 Group, Inc. (Nasdaq: CIRC) announced it has executed a definitive settlement agreement with SPP Credit Advisors, LLC, resolving all outstanding litigation between the parties and canceling the company's $35 million Convertible Seller's Note that was due in March 2027.

The settlement eliminates all future stock conversion rights and potential equity dilution associated with the note, cures existing defaults under the company's obligations to SPP, and restores remaining indebtedness to its contractual non-default interest rate.

As part of the agreement, SPP will grant Circle8 an irrevocable option to purchase approximately 21.9 million existing shares currently owned by SPP for $0.0001 per share. Simultaneously, Circle8 will issue approximately 21.9 million newly registered shares to SPP. Upon closing, SPP will relinquish all voting, dividend, and other shareholder rights associated with the existing shares pending their retirement.

The agreement establishes an approximately 18-month framework for orderly share disposition to facilitate repayment of the remaining indebtedness. Upon full repayment, whether through share sales, refinancing, or otherwise, any remaining shares will be returned to Circle8.

Delaware and New York litigation between the parties will be dismissed, with mutual releases exchanged.

"By resolving these legacy financing matters, eliminating our $35 million Convertible Seller's Note and substantially simplifying our capital structure, we have strengthened our financial position and removed a major source of uncertainty," said Guus Franke, Chief Executive Officer of Circle8 Group.

Circle8 also stated it continues to evaluate refinancing options for Lyneer Staffing's senior asset-based lending facility as part of its broader capital structure initiatives.

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