SCHEDULE 13D/A: Brera Holdings PLC Converts $255,000 Debt to Equity, Issuing 408,000 Class A Shares

Brera Holdings PLC has entered into an agreement to cancel $255,000 of outstanding debt owed to Daniel Joseph McClory in exchange for 408,000 Class A Ordinary Shares, effective December 31, 2024.

Summary

• Brera Holdings PLC (the Company) and Daniel Joseph McClory (the Creditor) entered into a Cancellation and Exchange Agreement effective December 31, 2024.
• The Creditor held $255,000 in outstanding principal debt from promissory notes issued on August 28, 2024, September 25, 2024, October 28, 2024, and November 19, 2024.
• Under the agreement, the $255,000 debt is cancelled, and the Company will issue 408,000 Class A Ordinary Shares to the Creditor.
• Upon receipt of the shares, the Creditor releases the Company and its affiliates from all claims related to the debt.
• The shares issued are characterized as restricted securities, not registered under U.S. federal or state securities laws, and carry no registration rights.
• Daniel Joseph McClory, as a reporting person, beneficially owns 7,258,000 Class B Ordinary Shares (or shares convertible to Class B), representing 39.3% of the Class B Ordinary Shares outstanding, including shares held directly, through Pinehurst Partners LLC, and BREA Holdings, LLC.
• Pinehurst Partners LLC beneficially owns 2,250,000 Class B Ordinary Shares (or convertible Class A shares), representing 15.5% of the Class B Ordinary Shares outstanding.
• BREA Holdings, LLC beneficially owns 4,550,000 Class B Ordinary Shares (or convertible Class A shares), representing 28.8% of the Class B Ordinary Shares outstanding.
• Class A Ordinary Shares carry ten (10) votes per share, while Class B Ordinary Shares carry one (1) vote per share.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive. While the company reduces debt, which is a positive, it comes at the cost of shareholder dilution. The transaction is a planned restructuring, not an unexpected positive or negative event. The creditor also takes on the risk of restricted securities.

Positives

• The Company reduces its outstanding debt by $255,000, improving its balance sheet and potentially reducing interest expenses.
• Debt is converted into equity, avoiding cash outflow for repayment and strengthening the Company's equity base.
• The transaction simplifies the Company's capital structure by settling existing promissory notes.

Negatives

• The issuance of 408,000 Class A Ordinary Shares will result in dilution for existing shareholders.
• The shares issued are restricted and have no registration rights, limiting the Creditor's immediate liquidity and potentially affecting future market perception.

Risks

• The shares acquired by the Creditor are characterized as restricted securities under U.S. federal securities laws, meaning they may be resold without registration only in certain limited circumstances.
• The shares have not been registered under the Securities Act or any state securities laws and are being offered and sold in reliance upon specific exemptions from registration requirements.
• The Creditor acknowledges that an investment in the shares is speculative and involves a high degree of risk.
• The shares must be held indefinitely unless such shares are registered under the Securities Act or applicable state securities laws, or an exemption from registration is available.
• There are no registration rights associated with the shares being acquired pursuant to this Agreement.

Future Outlook

The document primarily details a past transaction (effective December 31, 2024) and does not provide explicit forward-looking statements or guidance regarding future financial performance or strategic initiatives beyond the immediate effect of the debt-to-equity conversion.

Management Comments

• The Creditor agrees to cancel its Debt in exchange for 408,000 Class A Ordinary Shares on the terms set forth herein, and the Company is willing and able to issue the Class A Ordinary Shares to the Creditor on the terms described herein.
• For and in consideration of the issuance of the Shares to the Creditor, the Debt shall be deemed to be repaid in full, and the Company shall have no further obligations in connection with the Debt.

Industry Context

This debt-to-equity conversion is a common financial restructuring tool used by companies to reduce debt burden and improve liquidity, particularly in industries where access to traditional financing might be challenging or where companies seek to optimize their capital structure. It reflects a direct negotiation between a company and a significant creditor/shareholder, often indicating a strategic move to strengthen the balance sheet.

Related Party Transactions

• The Cancellation and Exchange Agreement is between Brera Holdings PLC and Daniel Joseph McClory.
• Daniel Joseph McClory is a significant beneficial owner of Brera Holdings PLC, holding 39.3% of Class B Ordinary Shares (including convertible Class A shares) and is also the Managing Member of Pinehurst Partners LLC and BREA Holdings, LLC, which are also significant beneficial owners. This indicates a transaction with a related party.

Stakeholder Impact

• Shareholders: Existing shareholders will experience dilution due to the issuance of new Class A Ordinary Shares. However, the reduction of debt could improve the company's financial stability and reduce financial risk.
• Creditors: Daniel Joseph McClory, as the creditor, converts his debt into equity, shifting his position from a debt holder to an equity holder, thereby taking on more equity risk but also gaining potential upside. Other creditors are not directly impacted by this specific conversion but may benefit from the company's improved debt profile.

Next Steps

• The Company will issue the 408,000 Class A Ordinary Shares to the Creditor as soon as practicable after December 31, 2024 (the Closing Date).
• The Creditor will hold the shares indefinitely unless registered under the Securities Act or applicable state securities laws, or an exemption from registration is available.

Key Dates

Recommendation

Keywords

Brera Holdings PLC, debt-to-equity conversion, Class A Ordinary Shares, promissory notes, SEC filing, Schedule 13D/A, restricted securities, share dilution, corporate finance, Daniel Joseph McClory, Pinehurst Partners LLC, BREA Holdings LLC, capital restructuring