Cyrk Inc. of Gloucester, Mass., raised $25 million through a private placement of convertible preferred stock, according to a filing with the Securities & Exchange Commission.
The Yucaipa Cos., a Los Angeles-based investment firm, invested in Cyrk through the Overseas Toys LP. The firm purchased 25,000 shares of preferred stock that will pay an annual dividend of 4%.
The stock converts into common stock at an initial conversion price of $8.25 per share. Yucaipa also received a warrant to purchase an additional $15 million of preferred stock.
Proceeds are slated for working capital and to fund the company’s growth and acquisition efforts.
In addition, Yucaipa’s managing partner, Ronald W. Burkle, will be appointed chairman of Cyrk’s Board of Directors following the transaction.
In the event of the exercise of the warrant, Yucaipa will hold a 23% ownership stake, making it Cyrk’s largest shareholder.
The promotional marketing company designs, makes, and distributes T-shirts, pullovers, jackets, sports bags, and caps bearing company logos. Revenue for 1998 topped $750 million.
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