Enablence Announces Closing of Comprehensive Financing Transaction

Rhea-AI Summary

Enablence (OTC: ENAFF) closed a comprehensive financing led by primary lender Pinnacle Island II LP. The package includes a new $15 million non-revolving term loan with a $5 million accordion, amendments extending an existing $25 million loan to 2029, and a waiver of cash interest payments on over $40 million of convertible debentures, subject to higher accrued rates. Proceeds refinance prior demand loans, pay senior lender interest, cover fees, and fund working capital. The board determined the company is in serious financial difficulty and used MI 61-101 exemptions; exchange approval is still pending.

Positive

• New $15 million term loan plus $5 million accordion facility
• 2025 Pinnacle II loan maturity extended to June 30, 2029
• Cash interest payments on over $40 million debentures waived at company option
• Interest on Pinnacle II facilities payable at maturity, easing near-term cash outflow

Negative

• Term loan interest rate 14% with 3% default premium
• 2025 Pinnacle II loan interest increased to 17% from April 1, 2026
• Debenture interest step-ups to 9.5% and 12.5% until arrears repaid
• Structuring fee on term loan totals 4.5%, 3.75% and 2.75% of principal
• Advisory fee of $565,000 payable to Paradigm Capital
• Board determined company is in serious financial difficulty under MI 61-101

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Financing Transaction Includes an Increased Investment from its Primary Lender

Ottawa, Ontario--(Newsfile Corp. - June 22, 2026) - Enablence Technologies Inc. (TSXV: ENA) ("Enablence" or the "Company"), a leading provider of optical chips for datacom, telecom, automotive and artificial intelligence (AI) applications, is pleased to announce the closing of a series of connected transactions that enabled the Company to raise additional capital from its primary lender (the "Financing Transaction"). The Company expects the Financing Transaction to position the Company to accelerate the execution of the Company's strategic growth plan and will capitalize on significant and immediate market opportunities in the optical components industry, including the large and growing data centre and rapidly emerging advanced vision and artificial intelligence markets that the Company serves today.

The Financing Transaction includes a non-revolving term loan, amendments to the Company's term loan with Pinnacle Island II LP ("Pinnacle II"), and a waiver of interest payments under the Company's convertible debentures.

Commenting on the Financing Transaction, Todd Haugen, CEO of Enablence, said: "This new round of financing supports our ongoing strategy to ramp wafer capacity and accelerate product development and deployment efforts of our new AI, datacenter and advanced vision products. The new investment will also help us meet strong customer demand across all three businesses: optical communications, compute and sensing. Lastly, the fact that this financing is being supported from an existing investor reflects confidence in our strategic growth plan, which we continue to execute successfully."

Michael Roland, President of the general partner of Pinnacle II, remarked: "Pinnacle Island II LP's continuance of long-term financial support reflects significant confidence in the Enablence leadership team's ongoing ability to capitalize on the generational opportunity of the AI Revolution."

Term Loan

As part of the Financing Transaction, Pinnacle II provided a non-revolving term loan of $15 million, with an accordion facility for an additional $5 million upon satisfaction of certain conditions precedent, pursuant to a term loan agreement between Pinnacle II and the Company dated June 19, 2026 (the "Term Loan"). The interest rate of the Term Loan is 14% per annum, payable at maturity. In the event of a payment default, default interest accrues at an additional 3% per annum (i.e., 17% per annum in aggregate) from the date of the payment default and for so long as such default continues. As additional consideration for entering into the Term Loan, the Company is required to pay Pinnacle II a structuring fee equal to the aggregate of: (i) 4.50% of the outstanding principal balance of the facility on the date of the Term Loan (being $675,000); (ii) 3.75% of the outstanding principal balance on the first anniversary of the Term Loan; and (iii) 2.75% of the outstanding principal balance on the second anniversary of the Term Loan, which is fully earned as of the date of the Term Loan and payable in full on the maturity date. The Term Loan matures on June 30, 2029.

A portion of the proceeds from the Term Loan was used to: (i) refinance $11.1 million of cash advances made on a regular basis by Pinnacle II to the Company in 2026 (the "Demand Loans"); and (ii) pay outstanding interest to the Company's senior secured lender, Vortex ENA LP ("Vortex"), under the existing term loan with Vortex in the amount of approximately $611,039.44. The balance of the proceeds of the Term Loan is expected to fund certain legal costs (up to $135,000) and for general working capital purposes of the Company.

The Demand Loans consisted of cash advances made by Pinnacle II to the Company from time to time to fund its operations, bearing interest at a rate of 14% per annum and payable on demand. As of the date hereof, all outstanding principal under the Demand Loans has been repaid in full; however, accrued and unpaid interest of $357,134.25 remains owing to Pinnacle II and will be payable on maturity of the Term Loan.

Loan Amendments

As part of the Financing Transaction, the term loan agreement between the Company and Pinnacle II dated April 4, 2025, as amended (the "2025 Pinnacle II Loan Agreement"), was further amended to: (i) extend the maturity date from March 31, 2027 to June 30, 2029 to align with the Term Loan; (ii) increase the interest rate from 14% per annum to 17% per annum, effective as of April 1, 2026; and (iii) provide that all interest will accrue and be payable at the amended maturity date (being June 30, 2029). Other than these amendments, the terms of the 2025 Pinnacle II Loan Agreement are materially unchanged. As of the date hereof, the aggregate amount owing under the 2025 Pinnacle II Loan Agreement is approximately $28,742,027.40, comprised of $25,000,000 in outstanding principal and $3,742,027.40 in accrued and unpaid interest.

Waiver of Interest on Convertible Debentures

On April 4, 2025, the Company amended the convertible debenture that had been issued to Pinnacle Island LP ("Pinnacle I") in the principal amount of $11 million and matures on June 30, 2027 (the "Pinnacle I Debenture"). The Company also issued convertible debentures with an aggregate principal amount of $29,859,248 to each of Pinnacle I, Pinnacle II and Paradigm Capital Partners Limited ("PCPL" and, together with Pinnacle I and Pinnacle II, the "Lenders") (collectively, the "Convertible Debentures"). Pursuant to the terms of the Pinnacle I Debenture, interest on the Pinnacle I Debenture is payable semi-annually in cash, and, pursuant to the terms of the Convertible Debentures, interest on the Convertible Debentures is payable quarterly in cash, with the first interest payments on the Pinnacle I Debenture and the Convertible Debentures due on June 30, 2026 (the "Interest Payments").

As part of the Financing Transaction, the Lenders have agreed to waive the Company's obligations to make Interest Payments on the Pinnacle I Debenture and the Convertible Debentures (the "Interest Payments Waiver"). The Interest Payments Waiver is available at the Company's option until the respective maturity dates of the Pinnacle I Debenture and the Convertible Debentures. In addition, so long as the Company chooses to deploy the cash that would have otherwise been used to settle the Interest Payments to support the Company's business strategy, the Lenders will not take any action that would have been contractually available to them as a result of the Company not making the Interest Payments. However, in accordance with their terms, from and after July 1, 2026, the Pinnacle I Debenture shall have interest accrue at 9.5% (instead of 7.5%) until all accrued and unpaid interest has been paid in full, after which interest shall revert to the 7.5% base rate, and the Convertible Debentures shall have interest accrue at 12.5% (instead of 9.5%) until all accrued and unpaid interest has been paid in full, after which interest shall revert to the 9.5% base rate.

Advisory Fee

In connection with the Financing Transaction, an advisory fee of $565,000 is payable to Paradigm Capital Inc ("PCI").

MI 61-101

The transactions comprising the Financing Transaction may be considered "related party transactions" within the definition of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101") (and Policy 5.9 of the Exchange) because each of Vortex, Pinnacle I, Pinnacle II, PCPL and PCI (collectively, the "Related Parties") may be considered a "related party" of the Company because they have beneficial ownership of, or control or direction over, more than 10% of the common shares of the Company on an aggregate basis. Their holdings are aggregated on the basis that they are each affiliates and/or related and connected issuers of PCI and may also be considered joint actors. The Company is relying on exemptions from the formal valuation and minority shareholder approval requirements available under MI 61-101. The Financing Transaction is exempt from the formal valuation requirement in Section 5.4 of MI 61-101 in reliance on Section 5.5(b) of MI 61-101, as no securities of the Company are listed on a specified market under MI 61-101. Additionally, in respect of the Term Loan, the Company is exempt from the minority shareholder approval requirement in Section 5.6 of MI 61-101 in reliance on Section 5.7(1)(f) of MI 61-101 as the Term Loan is not convertible, directly or indirectly, into equity or voting securities of the Company. In addition, the Financing Transaction as a whole is exempt from the minority approval requirement in Section 5.6 of MI 61-101 in reliance on Section 5.7(1)(e) of MI 61-101 as: (i) the Company is in serious financial difficulty; (ii) the Financing Transaction is designed to improve the financial position of the Company; (iii) the circumstances described in Section 5.5(f) of MI 61-101 are not applicable; (iv) the Company's board of directors (the "Board") and at least two-thirds of the Board's independent directors (as such term is defined in MI 61-101), acting in good faith, have determined that the Company is in serious financial difficulty and the Financing Transaction was designed to improve its financial position, and that the terms of the Financing Transaction are reasonable in the circumstances of the Company; and (v) there is no other requirement, corporate or otherwise, to hold a meeting to obtain any approval of the Company's shareholders.

For additional details, please refer to the material change report of the Company, which will be filed in due course on SEDAR+ (www.sedarplus.ca) under Enablence's issuer profile. The Company did not file a material change report more than 21 days before the expected closing of the Financing Transaction, as the details and amounts were not finalized until closer to the closing and the Company wished to close the transaction as soon as practicable for sound business reasons.

The Financing Transaction remains subject to final approval of the Exchange.

About Enablence Technologies Inc.

Enablence is a publicly traded company listed on the TSX Venture Exchange (TSXV: ENA) that designs, markets and sells optical chips and sub systems, primarily in the form of planar lightwave circuits (PLC), on silicon-based chips for datacom, telecom, automotive and artificial intelligence (AI) applications. Enablence products serve a global customer base, primarily focused today on data center and other rapidly growing end markets. Enablence also works with customers that have emerging market uses for its technology, including medical devices, automotive LiDAR, and virtual and augmented reality headsets. In select strategic circumstances, the Company also uses its proprietary, non-captive fabrication plant in Fremont, California to manufacture chips designed by third party customers. For more information, visit: www.enablence.com.

Cautionary Note Regarding Forward-looking Information

This news release contains forward-looking statements regarding the Company based on current expectations and assumptions of management, which involve known and unknown risks and uncertainties associated with our business and the economic environment in which the business operates. All such statements are forward-looking statements under applicable Canadian securities legislation. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In particular, this news release contains forward-looking statements pertaining to the ability of the Company to obtain final acceptance of the Exchange in respect of the Financing Transaction; the use of the proceeds raised in connection with the Financing Transaction; the impact that the Financing Transaction will have on the financial condition and prospects of the Company; the expectation of stronger sales in the pipeline and improved margins in future quarters; the timing and ability of the Company to obtain profitability; and the ability of the Company to maintain its business as a going concern. By their nature, forward-looking statements require us to make assumptions. Assumptions are based in part on the future capital expenditure levels, and the ability to secure necessary regulatory approvals. These statements are based on current expectations that involve several risks and uncertainties which could cause actual results to differ from those anticipated. These risks include, but are not limited to, risks relating to the Company failing to obtain the final acceptance of the Financing Transaction and ancillary matters; and the ability of the Company to leverage proceeds from the Financing Transaction to improve the financial condition, profitability and prospects of the Company. Although the Company believes that the expectations reflected in the forward-looking statements contained in this news release, and the assumptions on which such forward-looking statements are made, are reasonable, there can be no assurance that such expectations will prove to be correct. We caution our readers of this news release not to place undue reliance on our forward-looking statements as a number of factors could cause actual results or conditions to differ materially from current expectations. Additional information on these and other factors that could affect the Company's operations are set forth in the Company's continuous disclosure documents that can be found on SEDAR+ (www.sedarplus.ca) under Enablence's issuer profile. Enablence does not intend, and disclaims any obligation, except as required by law, to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

On Behalf of the Chief Executive Officer

Todd Haugen
CEO, Enablence Technologies Inc.
(206) 619-2833

For further information contact:

Todd Haugen
CEO, Enablence Technologies Inc.
todd.haugen@enablence.com
(206) 619-2833

Brian Siegel
CFO, Enablence Technologies Inc.
brian.siegel@enablence.com

Ali Mahdavi
Capital Markets & Investor Relations
am@spinnakercmi.com

Media and Analysts
Alison Parnell
Hill and Kincaid Marketing & PR
press@hillandkincaid.com

Neither the Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this release. No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/302250

FAQ

What financing did Enablence (OTC: ENAFF) announce on June 22, 2026?

Enablence announced a comprehensive financing package centered on a new $15 million term loan. According to Enablence, the deal also adds a $5 million accordion, amends an existing $25 million loan, and secures waivers of cash interest on significant convertible debenture balances.

What are the key terms of Enablence’s new $15 million term loan?

The new term loan is $15 million with a 14% annual interest rate, maturing June 30, 2029. According to Enablence, interest is payable at maturity, there is a potential $5 million accordion, and default interest adds 3% annually if payment defaults occur.

How does the Enablence (ENAFF) financing affect its existing Pinnacle II 2025 loan?

The 2025 Pinnacle II loan now matures June 30, 2029 and carries 17% interest. According to Enablence, all interest under this approximately $28.7 million facility will accrue and be payable at maturity, aligning timing with the new term loan’s due date.

What is the impact of the interest payments waiver on Enablence’s convertible debentures?

Lenders waived required cash interest payments on the Pinnacle I debenture and other convertible debentures. According to Enablence, interest instead accrues at higher rates, up to 9.5% and 12.5%, until all accrued and unpaid interest is fully repaid by maturity.

How will Enablence use proceeds from the June 2026 term loan financing?

Proceeds refinance $11.1 million demand loans and pay about $611,039 owed to senior lender Vortex. According to Enablence, remaining funds will cover up to $135,000 of legal costs and provide general working capital to support its ongoing business strategy.

Why did Enablence rely on MI 61-101 exemptions for this financing transaction?

The financing involves related parties that hold over 10% of Enablence’s shares, triggering MI 61-101 rules. According to Enablence, the board determined the company is in serious financial difficulty and that this transaction improves its financial position, enabling use of available exemptions.