Cord Blood America Inc (OTCMKTS:CBAI) said that it executed a purchase deal for the sale of preferred equity investment worth $0.724 million funded by Red Oak Partners, LLC and its partners. All generated proceeds shall be used towards paying debt owed to Tonaquint, Inc.

The management speaks

Joseph Vicente, the President of Cord Blood America, said that In December 2014 the management settled litigation with Tonaquint, Inc. The litigation outcome was positive but came with monthly amortization and interest payments that exceeded estimated cash generation.

 As per demand of litigation outcome, Cord Blood was weakly positioned and failed to capture the sizable growth and market opportunities offered in the industry. Red Oak’s investment provides strength to the organization and enables to immediately concentrate on growth measures, including seizing market share from the peers. The company adjourned its April 10, 2015 special meeting to May 7 in order to give shareholders reasonable time to accept the investment and take an informed decision.

The significance

Red Oak has had important iterations and discussions of term sheets before and after the Tonaquint litigation. It even carried out the talks after the settlement was stated and brings considerable value across M&A, corporate governance and financing. Red Oak’s managing member and its team have extensive public company experience and a strong track record of success. The company intends to leverage their skills to help grow shareholder value. Under the terms with Cord Blood, the Board will comprise majority of Directors that are independent from management.

The managing member of Red Oak said that with more stabilized balance sheet, Cord Blood America Inc (OTCMKTS:CBAI) is well placed to opt for a sensible and meaningful growth plan. The management believes that the deal best supports shareholders’ interests and they are already working to form and approach to M&A targets. Cord Blood’s excess storage capacity together with a less restricted marketing budget supports a real opportunity to expand its business. In last trading session, the stock price of Cord Blood declined 7.50% to close at $0.00370.