7 April 2017
Enablence to raise $6m in additional financing
Enablence Technologies Inc of Ottawa, Ontario, Canada, a publicly traded company that designs and manufactures optical components and subsystems for access, metro and long-haul markets, is to complete additional financing of about $6m.
Enablence has also terminated (by mutual agreement) the non-binding letter of intent (announced on 8 December) to merge with oil & gas exploration firm Esrey Energy Ltd (formerly LNG Energy Ltd) Vancouver, BC Canada. However, Enablence will still achieve its stated goal (announced at the time of execution of the letter of intent) to raise $10m in funds for pursuing its growth strategy. This will be achieved through a combination of the exercise of outstanding warrants, the private placements completed in December 2016 and January 2017 (which raised about $4m), cash advances of $2m (which will be converted as set out below), and the closing of the financing described below.
As announced previously, Enablence intends to use funds as growth capital for current and future products, plus general corporate purposes.
Part of the funds will be used for a capital expenditure program to expand production of planar lightwave circuit (PLC) chips. This is needed to satisfy existing purchase orders and anticipated future demand of the firm’s metro-market-focused 100G TxRx products. Part of the funds will also be allocated to complete development of the 100G TxRx product for the fast-growing data-center market and for R&D on next-generation 200G/400G products. The balance of the funds will be used for general corporate purposes and working capital.
As part of the total $10m raised, Enablence intends to complete a non-brokered private placement of common shares at a price of $0.07 per share, raising gross proceeds of about $4m. It also intends to complete a non-brokered private placement financing of $1000 principal amount of unsecured convertible debentures, for gross proceeds of up to $2m. Bearing interest of 10% per annum (payable quarterly from 30 June), the debentures will be convertible, at the option of the holder, into shares at a price of $0.09 per share, representing a conversion rate of about 11,111 shares per $1000 of debentures. The debentures will mature 36 months after their issuance.
As part of the financing, certain investors have advised Enablence that they will enter into debt settlement agreements with it, to settle outstanding non-interest-bearing cash advances totaling $2m, by the issuance of 7,142,857 shares for an aggregate value of $500,000 plus the issue of $1.5m of debentures (subject to approval by the TSX Venture Exchange).