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Talon Buys Up Preferred Stock

Zipper-maker Talon International Inc. announced Monday that it has eliminated all of its preferred stock in a $18.8 million cash-and-debt deal. The Woodland Hills company redeemed all its outstanding Series B preferred stock with $13 million in cash and a short-term, low-interest promissory note of $5.8 million. To complete the deal, Talon sold common stock at 9 cents a share to a group of private investors for $5.5 million. The investors included Mark Dyne, chairman of Talon’s board. The company now only has common shares outstanding. The move saves the company from a preferential $25.9 million payment to preferred stockholders should Talon be liquidated. The liquidation preference was scheduled to increase to more than $40 million in 2016. Chief Executive Lonnie Schnell said the elimination of preferred stock is a major accomplishment that should broaden investor interest in the company, which has a market cap of $2.49 million “The elimination of the preferred stock from our capital structure improves our risk profile, enhances our financial flexibility and removes a major impediment to creating value for common shareholders,” he said, in a prepared statement. Shares of Talon gained 4 cents to close at 10 cents in over-the-counter trading.

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