Capstone secures $10 million convertible note facility for acquisitions

Capstone Holding Corp. (NASDAQ: CAPS) closed a $10 million convertible note facility on July 29, 2025, to support its acquisition strategy. The building products distribution company initially drew $3 million from the facility and may access remaining funds subject to mutual agreement.

The proceeds from the initial draw will primarily fund a previously announced acquisition of a Southeast U.S.-based distributor of thin veneer stone and hardscape materials. That transaction remains under a non-binding letter of intent.

The convertible note facility carries key terms including an 8.34% original issue discount, 7.0% annual interest rate, and maturity date of July 29, 2026. The facility converts at the investor's option into Capstone shares at $1.72 per share.

"We are pleased that investors have reviewed our team and strategy and elected to provide a valuable convertible note facility to help finance our previously announced M&A strategy," said Matt Lipman, CEO of Capstone Holding.

Joseph Gunnar & Co., LLC served as exclusive placement agent for the offering.

Capstone operates through its Instone subsidiary, which serves 31 U.S. states with proprietary lines of stone veneer, hardscape materials, and modular masonry systems. The company targets a full-year revenue run-rate of $100 million through organic growth, strategic acquisitions, and capital discipline.

The pending Southeast acquisition would mark Capstone's expansion into what the company describes as one of the fastest-growing construction markets in the country. Capstone continues to pursue acquisition targets focused on founder-led businesses in high-growth markets.

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