Spectra7 Announces $US 6.5 Million Secured Term Loan Facility
Working Capital to Accelerate Revenue Ramp and Engagement in New Vertical Markets
March 31, 2016 - Palo Alto, CA and Toronto, ON (TSX:SEV) Spectra7 Microsystems Inc. (“Spectra7” or the “Company”) is pleased to announce today that the Company has closed a US $6.5 million senior secured term loan facility with Midcap Financial and certain lenders.
The loan facility is for a 36 month term with interest payable monthly in arrears at an annual rate of one month LIBOR plus 8.50%, subject to a LIBOR floor of 0.50%. Interest only is payable for the first 12 months of the term with the principal and interest thereafter amortized on a straight-line basis until the maturity date. The loan facility is secured by a first charge over all of the existing and subsequently acquired assets of the Company and each of its subsidiaries other than its subsidiary located in China. The Company expects to use the net proceeds from the facility for ongoing working capital requirements and to repay existing bank indebtedness.
Pursuant to the terms of the facility, the Company has issued to the lenders an aggregate of 855,010 common share purchase warrants (each, a “Warrant”) with each Warrant being exercisable into one common share in the capital of the Company for a period of five years at a price of $0.60 per share. In accordance with applicable securities legislation, the Warrants are subject to a statutory hold period of four months and one day expiring on July 31, 2016.
Tony Stelliga, President and Chief Executive Officer of the Company, stated that "this funding bolsters the Company’s available capital resources into 2017 as we continue to accelerate our engagement in additional vertical markets with our patented interconnect technology. In addition, we see this as a positive, non-dilutive way to fund the production ramp of our new products. We are pleased to partner with Midcap Financial - a world class lending institution - and appreciate their confidence in our unique business model”.
M Partners Inc. acted in an advisory capacity to the Company in connection with the financing.
ABOUT SPECTRA7 MICROSYSTEMS INC.
Spectra7 Microsystems Inc. is a high performance consumer connectivity company delivering unprecedented bandwidth, speed and resolution to enable disruptive industrial design for leading consumer electronics manufacturers in virtual reality, augmented reality, wearable computing, data centers and ultra-HD 4K/8K displays. Spectra7 is based in Palo Alto, California with design centers in Markham, Ontario, Little Rock, Arkansas and Cork, Ireland.
Certain statements contained in this press release constitute "forward-looking statements". All statements other than statements of historical fact contained in this press release, including, without limitation, those regarding the Company's future financial position and results of operations, strategy, proposed acquisitions, plans, objectives, goals and targets, and any statements preceded by, followed by or that include the words "believe", "expect", "aim", "intend", "plan", "continue", "will", "may", "would", "anticipate", "estimate", "forecast", "predict", "project", "seek", "should" or similar expressions or the negative thereof, are forward-looking statements. These statements are not historical facts but instead represent only the Company's expectations, estimates and projections regarding future events. These statements are not guarantees of future performance and involve assumptions, risks and uncertainties that are difficult to predict. Therefore, actual results may differ materially from what is expressed, implied or forecasted in such forward-looking statements. Additional factors that could cause actual results, performance or achievements to differ materially include, but are not limited to the risk factors discussed in the Company's annual MD&A for the year ended December 31, 2015. Management provides forward-looking statements because it believes they provide useful information to investors when considering their investment objectives and cautions investors not to place undue reliance on forward-looking information. Consequently, all of the forward-looking statements made in this press release are qualified by these cautionary statements and other cautionary statements or factors contained herein, and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, the Company. These forward-looking statements are made as of the date of this press release and the Company assumes no obligation to update or revise them to reflect subsequent information, events or circumstances or otherwise, except as required by law.
For more information, please contact:
Spectra7 Microsystems Inc.
Chief Financial Officer