Enablence Announces Comprehensive $51 Million Recapitalization Transaction
Enablence Technologies (TSXV: ENA) has completed a comprehensive $51 million recapitalization transaction to strengthen its financial position and accelerate growth. The transaction includes:
- A $29.8 million private placement of convertible debentures with 9.5% annual interest, maturing in 2029
- A $20 million term loan from Pinnacle Island II LP with 14% annual interest
- Amendments to existing loans and debt settlements
- Issuance of warrants and shares for debt settlements
The recapitalization coincides with increasing customer demand, enabling investments in manufacturing capacity, infrastructure, and product development across optical communications, sensing, and computing markets. The transaction received necessary approvals under MI 61-101 through financial hardship exemptions and remains subject to final Exchange approval.
Enablence Technologies (TSXV: ENA) ha completato una transazione di ricapitalizzazione di $51 milioni per rafforzare la propria posizione finanziaria e accelerare la crescita. La transazione include:
- Un collocamento privato di $29.8 milioni di obbligazioni convertibili con un interesse annuale del 9.5%, in scadenza nel 2029
- Un prestito a termine di $20 milioni da Pinnacle Island II LP con un interesse annuale del 14%
- Modifiche ai prestiti esistenti e accordi di debito
- Emissione di warrant e azioni per accordi di debito
La ricapitalizzazione coincide con l'aumento della domanda dei clienti, consentendo investimenti nella capacità produttiva, nelle infrastrutture e nello sviluppo di prodotti nei mercati delle comunicazioni ottiche, della sensoristica e del calcolo. La transazione ha ricevuto le approvazioni necessarie ai sensi della MI 61-101 tramite esenzioni per difficoltà finanziarie ed è soggetta all'approvazione finale della Borsa.
Enablence Technologies (TSXV: ENA) ha completado una transacción de recapitalización de $51 millones para fortalecer su posición financiera y acelerar el crecimiento. La transacción incluye:
- Un colocación privada de $29.8 millones en bonos convertibles con un interés anual del 9.5%, que vence en 2029
- Un préstamo a plazo de $20 millones de Pinnacle Island II LP con un interés anual del 14%
- Enmiendas a los préstamos existentes y acuerdos de deuda
- Emisión de opciones y acciones para acuerdos de deuda
La recapitalización coincide con el aumento de la demanda de los clientes, permitiendo inversiones en capacidad de fabricación, infraestructura y desarrollo de productos en los mercados de comunicaciones ópticas, sensores y computación. La transacción recibió las aprobaciones necesarias bajo MI 61-101 a través de exenciones por dificultades financieras y sigue sujeta a la aprobación final de la Bolsa.
Enablence Technologies (TSXV: ENA)는 재정적 위치를 강화하고 성장을 가속화하기 위해 5,100만 달러 규모의 포괄적인 자본 재조정 거래를 완료했습니다. 이 거래에는 다음이 포함됩니다:
- 2,980만 달러 규모의 전환 사채 사모 배정 (연 9.5% 이자, 2029년 만기)
- 2천만 달러 규모의 만기 대출 (Pinnacle Island II LP로부터 연 14% 이자)
- 기존 대출 및 채무 합의 수정
- 채무 합의를 위한 워런트 및 주식 발행
이번 자본 재조정은 고객 수요 증가와 일치하며, 광통신, 센서 및 컴퓨팅 시장 전반에 걸쳐 제조 능력, 인프라 및 제품 개발에 대한 투자를 가능하게 합니다. 이 거래는 재정적 어려움 면제를 통해 MI 61-101에 따른 필요한 승인을 받았으며, 최종 거래소 승인을 기다리고 있습니다.
Enablence Technologies (TSXV: ENA) a complété une transaction de recapitalisation de 51 millions de dollars pour renforcer sa position financière et accélérer sa croissance. La transaction comprend :
- Un placement privé de 29,8 millions de dollars d'obligations convertibles avec un intérêt annuel de 9,5 %, arrivant à échéance en 2029
- Un prêt à terme de 20 millions de dollars de Pinnacle Island II LP avec un intérêt annuel de 14%
- Amendements aux prêts existants et règlements de dettes
- Émission de bons de souscription et d'actions pour les règlements de dettes
La recapitalisation coïncide avec une demande croissante des clients, permettant des investissements dans la capacité de fabrication, l'infrastructure et le développement de produits dans les marchés des communications optiques, de la détection et de l'informatique. La transaction a reçu les approbations nécessaires en vertu de la MI 61-101 grâce à des exemptions pour difficultés financières et reste soumise à l'approbation finale de la Bourse.
Enablence Technologies (TSXV: ENA) hat eine umfassende Rekapitalisierungstransaktion in Höhe von 51 Millionen US-Dollar abgeschlossen, um seine finanzielle Position zu stärken und das Wachstum zu beschleunigen. Die Transaktion umfasst:
- Eine private Platzierung von 29,8 Millionen US-Dollar in wandelbaren Anleihen mit 9,5% Jahreszins, fällig im Jahr 2029
- Ein Terminkredit über 20 Millionen US-Dollar von Pinnacle Island II LP mit 14% Jahreszins
- Änderungen an bestehenden Krediten und Schuldenregelungen
- Ausgabe von Warrants und Aktien zur Schuldenregelung
Die Rekapitalisierung fällt mit der steigenden Kundennachfrage zusammen, was Investitionen in die Produktionskapazität, Infrastruktur und Produktentwicklung in den Bereichen optische Kommunikation, Sensorik und Computertechnik ermöglicht. Die Transaktion erhielt die erforderlichen Genehmigungen gemäß MI 61-101 durch Ausnahmen für finanzielle Schwierigkeiten und unterliegt der endgültigen Genehmigung der Börse.
- Secured substantial $51 million in total financing to strengthen financial position
- Strong order book and customer demand acceleration reported
- Extended debt maturities and restructured payment terms provide financial flexibility
- Received waivers for previous loan defaults
- High interest rates on new debt (14% on term loan, 9.5% on convertible debentures)
- Significant dilution potential through convertible debentures and warrants
- Company acknowledged being in 'serious financial trouble'
- Heavy debt service obligations will impact cash flow availability for operations
Recapitalization Transaction Consists of Private Placement, Term Loan, Shares-for-Debt Settlements and Loan Amendments
Ottawa, Ontario--(Newsfile Corp. - April 4, 2025) - 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 to recapitalize the debt of the Company (the "Recapitalization Transaction"). The Company expects the Recapitalization 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 Recapitalization Transaction includes an amendment to the Company's term loan (the "Vortex Loan Amendment") with Vortex ENA LP ("Vortex"), amendments (the "Pinnacle I Debenture Amendment") to the Pinnacle I Debentures (as defined below) held by Pinnacle Island LP ("Pinnacle I"), a shares-for-debt settlement with one of the Company's creditors (the "Shares-for-Debt Settlement"), the recapitalization of outstanding loans through the issuance of debentures (the "Convertible Debentures") convertible into common shares of the Company ("Common Shares") in the principal amount of approximately
Commenting on the Recapitalization Transaction, Todd Haugen, CEO of Enablence, said: "The recapitalization of Enablence, including significant new investment into the company, is occurring precisely as we experience meaningful acceleration in customer demand. To capitalize on this momentum, we're investing in expanded manufacturing capacity, infrastructure enhancements, and accelerated product development across our core optical communications solutions for traditional data centre applications, as well as advanced vision and artificial intelligence products serving diverse sensing and computing markets. We believe our strong order book and robust growth across optical communications, optical sensing, and optical computing place Enablence in an outstanding position to deliver sustained revenue growth. Industry trends and our innovative product portfolio firmly establish Enablence for long-term success as we enter one of the most dynamic and exciting periods in the optical semiconductor market."
The Financings
As part of the Recapitalization Transaction, the Company completed the Private Placement, issuing Convertible Debentures with a face value of
The Convertible Debentures have an interest rate of
Pinnacle II also provided the Term Loan, which was provided as part of the Recapitalization Transaction pursuant to a term loan agreement between Pinnacle II and the Company dated April 4, 2025 (the "Closing Date"). The interest rate of the Term Loan is
The balance of the proceeds of the Term Loan is expected to fund certain legal costs (up to
Loan and Convertible Debenture Amendments
As part of the Recapitalization Transaction, the term loan agreement between the Company and Vortex dated June 27, 2023, as amended (the "Vortex Loan Agreement"), providing for a term loan to the Company (the "Vortex Loan"), was further amended to: (i) extend the maturity date to March 31, 2028; (ii) capitalize all interest accrued and unpaid to the Closing Date; (iii) calculate and capitalize all interest from the Closing Date to March 31, 2026; (iv) provide that interest only starts to accrue on January 1, 2026, with the first interest payment on March 31, 2026, after which interest will be payable in respect of the Vortex Loan on a monthly basis; and (v) grant a waiver of any defaults under the Vortex Loan for failure to make timely interest payments. Other than these amendments, the terms of the Vortex Loan Agreement are materially unchanged.
In connection with, and as partial consideration for, the Vortex Loan Amendment, the Company granted 1,500,000 Common Share purchase warrants to Vortex (each, a "Vortex Bonus Warrant"). Each Vortex Bonus Warrant entitles the holder to acquire one Common Share at a price of
The Company and Pinnacle I also entered into the Pinnacle I Debenture Amendment to amend the terms of the secured convertible debenture in the principal amount of
Shares-for-Debt and Shares-for-Services Settlement
In connection with the Recapitalization Transaction, the Company also settled an outstanding debt to Paradigm Capital Holdings Inc. ("PCHI") in the amount of
In connection with the Recapitalization Transaction, an advisory fee of
MI 61-101
The transactions comprising the Recapitalization 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, PCHI 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
In connection with the Recapitalization Transaction, the Company established a special committee of independent directors, comprised of Louis De Jong, Daniel Huff and Oded Tal (the "Special Committee") to review the Company's financial condition and circumstances as well as the proposed Recapitalization Transaction and possible alternatives. The Special Committee as well as the full Board considered, among other things, the liquidity and going concern issues that the Company have faced for some time, including the Company's financial position and debt level, default or breaches and impending maturity current liabilities and debt as well as ongoing debt service obligations which require the Company to dedicate significant cash flow to interest expense which reduces the funds available for ongoing operations and working capital needs and impose restrictions on the Company's business. As part of their deliberations, the Special Committee and the Board also considered the terms and conditions of the Recapitalization Transaction and the potential its potential impact on the Company's financial position as well as the criteria and conditions with respect to the financial hardship exemptions described herein. The Board and Special Committee are of the view that the Recapitalization Transaction has the effect of (i) providing additional capacity to service debt obligations and support ongoing operations and working capital requirements of the Company, (ii) providing waivers from breaches and defaults occurring under other existing indebtedness, without which waivers the amounts under such indebtedness of the Company may be immediately due and payable and for which the Company has no means to repay and would therefore be insolvent, and (iii) extending the maturity of the Company's indebtedness. Given the foregoing, each of the Board and the Special Committee determined that the Recapitalization Transaction will alleviate the immediate liquidity concerns of the Company and improve the Company's financial condition.
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 Date, 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 Recapitalization Transaction remains subject to final approval of the Exchange.
Early Warning Disclosure
In connection with the Recapitalization Transaction, Vortex was issued the Vortex Bonus Warrants. Prior to issuance of the Vortex Bonus Warrants, the Related Parties had beneficial ownership of 2,869,509 Common Shares and 575,000 Common Share purchase warrants, representing approximately
Vortex acquired the Vortex Bonus Warrants in connection with the Related Parties' strategic investment in the Company. The Related Parties hold securities of the Company for investment purposes and not for the purpose of influencing the control or direction of the Company. Depending on various factors including, without limitation, the Company's financial position, the price levels of the Common Shares, conditions in the securities markets and general economic and industry conditions, the Company's business or financial condition and other factors and conditions the Related Parties deem appropriate, they may increase or decrease their beneficial ownership of Common Shares or other securities of the Company whether in the open market, by privately negotiated agreement or otherwise.
The Company's address is 390 March Road, Ottawa, Ontario, K2K 0G7. Vortex's address is 95 Wellington Street West, Suite 2101, Toronto, Ontario, M5J 2N7. A copy of the Early Warning Report can be obtained from Michael Roland (416.361.6047) or on SEDAR+ (www.sedarplus.ca) under Enablence's issuer profile.
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 timing and ability of the Company to complete the Shares-for-Services Settlement; the ability of the Company to obtain final acceptance of the Exchange in respect of the Recapitalization Transaction and the approval for the issuance of Common Shares to settle the payment of the Advisory Fee; the use of the proceeds raised in connection with the Recapitalization Transaction; reduction in the debt burden; the impact that the Recapitalization Transaction will have on the financial condition and prospects of the Company, including revenue growth; 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, the ability to fulfill all conditions precedent to the closing of the Recapitalization Transaction, the ability to secure regulatory approval and the ability to secure shareholder approval. 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 Recapitalization Transaction and ancillary matters; and the ability of the Company to leverage proceeds from the Recapitalization Transaction to improve the financial condition, revenue growth 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.
For further information contact:
Stan Besko, MBA
CFO Enablence Technologies Inc.
stan.besko@enablence.com
Todd Haugen
CEO Enablence Technologies Inc.
todd.haugen@enablence.com
Ali Mahdavi
Capital Markets & Investor Relations
am@spinnakercmi.com
Media and Analysts
Alison Parnell
Hill and Kincaid Marketing & PR
press@hillandkincaid.com
Media
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/247416
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