Spectra7 Announces Closing of First Tranche of Private Placement of $10.7 Million and Completion of Amendments to Existing Debentures to Permit Forced Conversion
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TORONTO, May 10, 2024 /CNW/ -- (TSXV: SEV) (OTCQB:SPVNF) Spectra7 Microsystems Inc. ("Spectra7" or the "Company"), a leader in high-performance analog semiconductors for broadband connectivity markets, such as AI networks, hyperscale data centers, and AR/VR, is pleased to announce it has closed the first tranche of its previously announced non-brokered private placement (the "Private Placement") to certain institutional investors, other investors and insiders of the Company (the "Subscribers") of units ("Units"), with each Unit consisting of either: (i) one common share (each a "Common Share") and one common share purchase warrant (each a "Warrant"); or (ii) if the Share Ownership Threshold (defined below) would be exceeded by a Subscriber as a result of their subscription for Units or a Subscriber otherwise elects, one pre-funded common share purchase warrant (each, a "Pre-Funded Warrant") and one Warrant, at a purchase price of $0.10 per Unit (the "Offering Price"). The Company issued 107,683,090 Units for aggregate gross proceeds of approximately $10.7 million in a first tranche of the Private Placement.
Each Warrant is exercisable immediately and entitles the holder thereof to purchase either: (i) one Common Share; or (ii) if the Share Ownership Threshold would be exceeded by a Subscriber as a result of the exercise of their Warrants, one Pre-Funded Warrant, at an exercise price of $0.11 per Common Share or Pre-Funded Warrant until May 10, 2029. The expiry date of the Warrant can be accelerated by the Company at any time prior to the expiry date of the Warrants if the closing price of the Common Shares on the TSX Venture Exchange (the "TSXV") is greater than $0.33 for any period of 10 consecutive trading days and certain volume trading thresholds are met during those 10 consecutive trading days. Each Pre-Funded Warrant entitles the holder to purchase one Common Share for a nominal amount subject to compliance with the Share Ownership Thresholds. The Pre-Funded Warrants do not expire.
The "Share Ownership Threshold" is (i) 9.99% of the number of Common Shares outstanding immediately after giving effect to the purchase of the Units, exercise of the Warrants, or conversion of the 9% Debentures or 14% Debentures, as applicable; or (ii) if the relevant Subscriber or holder has filed and the TSXV has cleared for acceptance a personal information form in the form prescribed by the TSXV, 19.99% of the number of Common Shares outstanding immediately after giving effect to the purchase of the Units, exercise of the Warrants, or conversion of the 9% Debentures or 14% Debentures, as applicable; provided, however, that the 19.99% threshold shall apply if the requisite disinterested shareholder approval has been obtained in accordance with applicable TSXV policies. The Company may complete subsequent tranches of the Private Placement to bring the total aggregate gross proceeds up to $24 million. The net proceeds of the Private Placement are expected to be used for working capital and general corporate purposes.
In connection with the Private Placement, the Company and a lead investor in the Private Placement (the "Lead Investor") have entered into an investor rights agreement (the "IRA") whereby the Company has granted certain rights to the Lead Investor, including: (a) a nomination right with respect to one director on the board of the Company; (b) a pre-emptive right and top-up right in connection with certain future equity financings by the Company, each right being provided to the Lead Investor to allow it to maintain its ownership level in the Company and being subject to the prior approval of the TSXV; and (c) registration rights in the event the Company lists the Common Shares on a U.S. national securities exchange and becomes subject to the reporting requirements of U.S. securities laws. The IRA shall be terminated in the event the Lead Investor's ...
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