Financing May Clean Up Jamba's Books (JMBA, JAMBU, JMBAW)

Jamba, Inc. (NASDAQ: JMBA) has completed a sale of convertible preferred stock which raised $35 million in gross proceeds for the company. The funding was led by a $19.55 million investment by private equity firm Mistral Equity Partners, and the remaining $15.45 million investment was made by a company controlled by the Serruya family, an entrepreneurial Canadian-based family.  If the terms are as outlined, the parent of Jamba Juice may be on the way to significantly improving its books.

The convertible preferred stock is set to mature in June 2016, unless converted earlier and it includes an 8% annual dividend. The convertible price is $1.15 per share in common stock, a 15% premium to Friday’s close and within the 52-week trading range of $0.35 to $2.53.

The company said that this eliminates long-term debt and also provides additional capital for the company’s BLEND plan launched in January .  That BLEND plan is defined by the company as “Building a Customer First Service Culture, Building a Food Capability, Licensing and Consumer Products Platform, Improvement in our Expense Structure and Accelerating Franchising and Non-Traditional Store Development.”

Jamba also has some thinly-traded public warrants which trade under the “JMBAU” and “JMBAW” tickers.

We show that the stock’s listed public market cap today is $59 million after an 8% gain to $1.08.  That will change if shares get converted and is technically higher already if you include the financing here.  If these shares manage to convert, it suddenly cleans up Jamba’s balance sheet in a significant manner.

It was early 2006 when Jamba was acquired by a Special Purpose Acquisition Company, and that single event is what many pointed to as the defining expansion of the SPAC trends throughout 2007 and briefly in 2008.  This stock traded north of $10.00 for a while, but that is ancient history.

Jon C. Ogg
June 1, 2009