Full Repayment of Previous Convertible
Debentures
NOT FOR DISTRIBUTION TO U.S. NEWSWIRE
SERVICES OF DISSEMINATION IN THE UNITED
STATES
TORONTO, Aug. 25,
2022 /CNW/ -- (TSXV: SEV) (OTCQB: SPVNF) Spectra7
Microsystems Inc. ("Spectra7" or the "Company"), a
leading provider of high-performance analog semiconductor products
for broadband connectivity markets, announced today the closing of
the second tranche of its private placement (the "Offering")
of 14% unsecured convertible debentures (the "Debentures").
The closing of the second tranche of the Offering, which was
upsized, consisted of the issuance of $5,064,000 principal amount of Debentures
for gross proceeds of $4,962,720. Together with the first tranche,
the Company has issued a total of $8,873,000 principal amount of Debentures for
gross proceeds of $8,695,540. All
dollar amounts referenced in this release are in Canadian
dollars.
"We are thrilled with the support from our existing shareholders
and insiders who are invested in Spectra7's growth objectives. We
also attracted new investors who understand our signal conditioning
technology deployed in Active Copper Cable as a game changer for
the growing hyperscale data center interconnect market," said
Bonnie Tomei, Chief Financial
Officer. "The new Debentures also permit us to borrow senior
debt of up to $5 million which was
not available under the previous convertible debentures. This
available capacity could provide for additional working capital to
help satisfy more of our confirmed orders."
Each $1,000 principal amount of
Debentures was sold at a subscription price of $980. The Debentures mature on December 31, 2024 (the "Maturity Date")
and the principal amount of each Debenture will be convertible into
common shares of the Company (each, a "Common Share") at the
option of the holder at any time prior to the close of business on
the last business day immediately preceding the Maturity Date, at a
conversion price of $1.02 per Common
Share, subject to adjustment upon certain customary events. Holders
converting their Debentures will receive accrued and unpaid
interest thereon for the period from and including the date of the
latest interest payment date to, and including, the date of
conversion. The Company has a right to force conversion of the
outstanding principal amount in connection with certain
transactions where the Common Shares are trading above 200% of the
conversion price.
All securities issuable in the Offering are subject to a
statutory hold period until the date that is four months and one
day from the date of issuance. Approval of the TSX Venture Exchange
is required prior any conversion of Debentures that would result in
a holder holding more than 9.9% of the issued and outstanding
Common Shares and prior to the settlement of any interest payment
in Common Shares. No holder may convert Debentures that would
result in the holder holding more than 19.9% of the issued and
outstanding Common Shares.
Insiders of the Company participated in the second tranche of
the Offering purchasing an aggregate of $1,531,000 principal amount of Debentures.
Pursuant to Multilateral Instrument 61-101 Protection of
Minority Security Holders in Special Transactions ("MI
61-101"), the Offering constitutes a "related party
transaction" as insiders of the Company subscribed for a total of
$2,037,000 of the Debentures. The
Company is relying on exemptions from the formal valuation and
minority approval requirements of MI 61-101, as neither the fair
market value of the Debentures, nor the consideration paid,
exceeded 25% of the Company's market capitalization. The Company
did not file a material change report more than 21 days before the
closing of the Offering as the details of the related parties'
participation in the Offering had not been settled. The Offering
was approved by all of the independent directors of the
Company.
The Company paid finder's fees totaling $273,900 and issued 283,548 finder's warrants
(each, a "Finder's Warrant") to arm's length parties in
connection with the second tranche of the Offering. Each Finder's
Warrant entitles the holder to purchase one Common Share at a price
of $1.02 for a period of two years
from issuance.
Repayment of the Previous
Convertible Debentures
The Company also announced the expected repayment of its 7%
unsecured convertible debentures in full on September 2, 2022, which includes $5,422,400 principal amount and $65,370 of accrued and unpaid interest thereon as
well as $199,978 of extension bonus
and $1,438 of associated
interest.
This news release does not constitute an offer to sell or the
solicitation of an offer to buy the securities in the United States. The securities have not
been and will not be registered under the United States Securities
Act of 1933, as amended (the "U.S. Securities Act"), or any
state securities laws and may not be offered or sold in
the United States or to U.S.
Persons unless registered under the U.S. Securities Act and any
applicable state securities laws or an exemption from such
registration is available.
ABOUT SPECTRA7 MICROSYSTEMS
INC.
Spectra7 Microsystems Inc. is a high-performance analog
semiconductor company delivering unprecedented bandwidth, speed,
and resolution to enable disruptive industrial design for leading
electronics manufacturers in data centers, 5G infrastructure,
virtual and augmented reality, and other connectivity markets.
Spectra7 is based in San Jose,
California with a design center in Cork, Ireland and technical support location
in Dongguan, China. For more
information, please visit www.spectra7.com.
Neither the TSX Venture Exchange nor its regulation services
provided (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
CAUTIONARY NOTES
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, the Company's anticipated repayment of its 7%
unsecured convertible debentures, the Company's strategy, 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 information form for the year
ended December 31, 2021. 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:
Matt Kreps/Jim Fanucchi
Darrow Associates
214-597-8200
ir@spectra7.com
Spectra7 Microsystems Inc.
Bonnie Tomei
Chief Financial Officer
669-212-1089
ir@spectra7.com
Spectra7 Microsystems Inc.
John Mitchell
Public Relations
650-269-3043
pr@spectra7.com
SOURCE Spectra7 Microsystems Inc.