Eastside Distilling Inc., Seattle, said it entered into a agreement in which Crater Lake Private Ltd. would purchase up to 2.5 million shares of Eastside’s Series B Preferred Stock, $0.0001 par value per share, at a purchase price of $1 per Preferred Share. The Preferred Shares are convertible into shares of the Company’s common stock, par value $0.0001 per share an initial conversion price of $3.10.
In connection with the purchase of the Preferred Shares, Crater Lake shall receive a warrant to purchase up to 116,666 shares of common stock at an exercise price equal to $3.75. The Company anticipates that the private offering will close on or before Friday (10/29). The securities in the private placement haven’t been registered with the Securities & Exchange Commission.
In addition, the Company has sold 718,000 of shares of common stock pursuant to an “at-the-market” offering previously announced on Sept. 10, bringing the total common shares outstanding to 14,087,028 as of Oct. 25.
Who is Crater Lake PLC? We don’t know. Eastside’s press release didn’t provide any information about its funder, and we couldn’t find anything on the internet. However, we do know something about Kelvin Seetoh, managing director of Crater Lake. He’s apparently a 29-year-old Singaporean investor, who has created Growth Investing Mastery, in which he shares his insights as an investment analyst, and a blog, Kelvestor.
The bigger question, in our mind, is why Eastside didn’t give its fans — the people who drink its products — the opportunity to invest in the preferred shares. One answer, of course, is that opening the investment to its fans probably would mean the offering would have to be registered with the SEC.
But still, it seems to us, the people who drink Eastside’s products will probably be more loyal that some almost-30 investor from Singapore. So, why does he get the opportunity and the people who are building the company don’t?
We asked Eastside. If it answers, we’ll share the response with you.