CareCloud proposes amendment to terms of Series A preferred stock

CareCloud has begun soliciting proxies from the holders of its 11% Series A Cumulative Redeemable Perpetual Preferred Stock to approve an amendment to the Company’s Certificate of Designations, Preferences and Rights of 11% Series A Cumulative Redeemable Perpetual Preferred Stock. Under the Preferred Stock Proposal, holders of Series A Preferred Stock would receive similar change of control protections to those afforded to holders of the Company’s 8.75% Series B Cumulative Redeemable Perpetual Preferred Stock. The future dividends of the Series A Preferred Stock would mirror that of the Series B Preferred Stock, and the Company would, going forward, have the right to exchange the shares of Series A Preferred Stock for shares of common stock at the liquidation preference value of $25 per share, plus any accrued and unpaid dividends. The Proxy. On July 8, 2024, the Company filed a Definitive Proxy Statement relative to a Special Meeting of Series A Preferred Shareholders. This Proxy, in turn, is the result of the capital structure analysis that was performed by Citizens JMP, which was prompted by the Board’s exercise of its fiduciary duty in response to an unsolicited indication of interest to acquire the Company. The Proxy seeks approval of the Preferred Stock Proposal which, if approved by holders of two-thirds of the Series A Preferred Stock, would modify the terms of the Series A Preferred Stock by: Change of Control Rights. Adding a change of control provision, as presently afforded to holders of Series B Preferred Stock, that would require an acquirer of a controlling interest in the Company’s common stock to redeem the Series A Preferred Stock in exchange for shares of the Company’s common stock based on a $25 per share liquidation preference plus any accumulated and unpaid dividends; Equivalent Dividend Rate. Changing the dividend to 8.75% per annum; and Exchangeability. Introducing an exchange feature that would enable the Company, at its option, to cause the outstanding shares of the Series A Preferred Stock, at any time, to be automatically exchanged for a number of shares of common stock equal to the quotient obtained by dividing the sum of the $25.00 per share liquidation preference, and the amount of any accumulated and unpaid dividends on such share of Series A Preferred Stock being exchanged by the volume weighted average price of the shares of the Company’s common stock.