Stock of Asian food company DDC jumps after loan restructuring announced

Quotes on Hong Kong-based Asian food producer DayDayCook (DDC) jumped 8% in premarket trading in New York today, Monday, August 26. This comes after a Friday announcement that DDC had restructured a $4.8 million loan and completed a $1.7 million private placement to bolster its balance sheet.

Details

On Friday, August 23, DDC stock finished the day down more than 4% at $0.40 per share on the New York Stock Exchange (NYSE). The closing price matched the trough the stock had reached back on August 8. In premarket trading today, however, the stock gained 8%. Since its IPO in November 2023, DDC has lost almost 94%.

Before the opening bell on Friday, DDC announced that it had completed a $4.8 million loan restructuring. Under the terms of the agreement, 10 creditors will convert the outstanding principal and interest into common shares. Additionally, four investors purchased $1.7 million of shares. Overall, the company issued 9.5 million new shares, a more than 240% increase versus the 3.9 million shares sold in the IPO.

“Converting the loans and gaining additional financial support have a meaningful impact on our balance sheet and provide the company with cash to grow our brands and fund expanded distribution channels,” company founder and CEO Norma Chu was quoted as saying in the press release.

Context

DDC is a ready meals producer based in Hong Kong. In November 2023, the company went public with an IPO on the NYSE, which failed to excite investors. The IPO price was $8.50 per share, 10% below the lower end of the price range indicated in the prospectus. By early December, DDC stock had dropped about 30%. At that time, the company decided to buy back up to 500,000 shares (12.8% of the issued shares) within a year to support its stock price.

However, the challenges did not end there. In May, DDC was notified by the NYSE of noncompliance with listing standards for failing to file its 2023 annual report on time and given six months to file. Then, in July, the company reported that the NYSE had accepted its plan to regain compliance with listing standards by October 23, 2025. It will be subject to quarterly monitoring for compliance with the plan, and if it “does not make progress consistent with its plan,” the NYSE will initiate delisting proceedings.

Analyst recommendations

According to MarketWatch, DDC is covered by one analyst, who recommends buying the stock, with a target price of $17.40 per share.