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Casper Sleep Burns $42.4 Million, May Soon Violate Debt Covenant
Bed-in-a-box firm may not have enough cash on deposit to remain compliant with terms of revolver.
August 17, 2021
Casper Sleep (CSPR), a bed-in-a-box pioneer, ended the latest quarter with $42.4 million less than it had 90-days prior. Though it doesn’t articulate how it’ll calculate it, Casper promises to be cash flow positive in 2022. The problem, Casper revealed, is that it doesn’t know when exactly it’ll accomplish its goal.

In its latest 10-Q, Casper revealed its ongoing cash burn could cause it to violate the terms of its revolving credit agreement:

“Given the uncertainty around when in 2022 the Company will become cash flow positive, the Company's management estimated a Cash Dominion Event (as defined under the Company's Credit Agreement) may be triggered based on the level of Deposited Cash (as defined in the Credit Agreement) maintained by the Company. Therefore, the Company outstanding obligations under the Revolving Credit Facility were reclassified to short-term debt as of June 30, 2021.”

Unless the bank makes an exception, Casper would be in violation of the cash dominion terms if it failed to maintain $32 million in deposited cash. The company currently has $49.6 million, or a $17.6 million buffer before it triggers a violation. If Casper triggers a cash dominion event and can’t as readily borrow, shareholders should not be surprised by another equity issuance.
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