Second Quarter of 2021 and $10 Million Private Placement /NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES OF AMERICA/
Investor Conference Call on August 12, 2021 at 8:00 a.m. ET
TORONTO, Aug. 11, 2021 /CNW/ - Baylin Technologies Inc. (TSX: BYL) (the "Company" or "Baylin"), a leading diversified global wireless technology company focused on research, design, development, manufacturing and sales of passive and active radio frequency products, terrestrial microwave products, and services, today announced its financial results for the three and six months ended June 30, 2021. All amounts are stated in Canadian dollars unless otherwise indicated.
SECOND QUARTER SUMMARY
- Announced industry veteran Leighton Carroll as the new Chief Executive Officer.
- Launched the Summit II advanced solid state power amplifier product line for high power applications for the satellite industry.
- Received technical approval for two macro tower antennas for use by a major US wireless carrier – a first for the Company.
- Revenue was $21.6 million in the second quarter of 2021, a decrease of $9.0 million or 29.4% compared to the second quarter of 2020.
- Wrote down to zero the remaining goodwill of $15.9 million related to the Company's 2018 acquisitions.
- Wrote off $5.5 million in unusable inventory related to the Company's 2018 acquisitions.
- Net cash as at June 30, 2021 decreased by $3.0 million from December 31, 2020 mainly due to operating losses and principal and interest payments, offset by proceeds from the exercise of common share purchase warrants issued in December 2020, drawdown of the loan from the Company's credit facility in Vietnam and a decrease in non-cash working capital.
- Conversion of 70% of the Company's outstanding convertible debentures reduced debt by $12.1 million and annual interest burden by $0.8 million.
RECENT DEVELOPMENTS
New Chief Executive Officer
On June 7, 2021, the Company announced the appointment of Leighton Carroll as the new Chief Executive Officer. Mr. Carroll brings over 25 years of experience in telecommunications, holding progressively senior positions within AT&T, including as leader of significant business units where he consistently beat performance targets for his businesses. Since leaving AT&T he has worked in the telecommunications infrastructure sector, running two separate businesses. In each case he was able to grow those companies significantly through customer diversification, service growth, and through successful M&A. Throughout his career, Mr. Carroll has demonstrated strong corporate leadership and the ability to achieve significant revenue and customer growth, increasing value for stakeholders.
"I am thrilled to join the team at Baylin. While the company has been through a challenging period and has certainly been impacted by the COVID-19 pandemic, a few things are very clear to me. Baylin and its operating companies have solid products customers need, terrific engineering and manufacturing capabilities, and great people. With the support of the board and our investors I am confident that our best days lay in front of us," said Mr. Carroll.
"Leighton is a terrific choice as CEO for Baylin," said Mr. Jeffrey Royer, Chairman. "Leighton's track record of building and growing businesses in telecommunications is strong, including extensive North American and international experience. He also successfully grew two businesses built on satellite technology. I am excited to see what the team can accomplish under his leadership."
Private Placement
The Company has entered into an engagement letter dated August 11, 2021 with Paradigm Capital Inc., as lead agent, on behalf of a syndicate of agents (collectively, the "Agents"), in connection with a proposed best efforts private placement financing (the "Offering") of 11,112,000 common shares of the Company (the "Common Shares") at a price of $0.90 per Common Share for total proceeds of approximately $10 million. The Company has granted the Agents an option to sell up to an additional 15% of the number of Common Shares offered pursuant to the base Offering to cover over-allotments. As part of the Offering, the Company has entered into a separate agreement with 2385796 Ontario Inc. (the "Insider"), the Company's largest shareholder, under which the Insider has agreed to support the Offering by agreeing to purchase Common Shares with a purchase price equal to the lesser of: (i) $10 million (subject to increase by the amount (if any) of the over-allotment option); and, (ii) the difference between the full amount of the Offering and the aggregate purchase price paid by all other investors (if any) in the Offering. Accordingly, the Company is assured of receiving at least $10 million in proceeds from the Offering, subject to receipt of applicable regulatory approvals and satisfaction of other customary closing conditions, including listing of the Common Shares on the Toronto Stock Exchange (the "TSX"). Jeffrey C. Royer, Chairman of the Board of Directors of the Company, exercises control and direction over investment decisions of the Insider. The Company is relying on the "financial hardship" exemption available to it under the rules of the TSX to permit the Insider to purchase more than 10% of the 62,447,014 common shares of the Company currently outstanding without the Company having to obtain disinterested shareholder approval. The Offering is expected to close on or about September 1, 2021.
Credit Agreement
The Company and its lenders (Royal Bank of Canada and HSBC Bank Canada) have agreed to further amendments to the Company's Credit Agreement dated March 29, 2019. These amendments include a waiver of compliance with the Fixed Charge Coverage Ratio as at June 30, 2021, change to the manner in which the Fixed Charge Coverage Ratio is calculated for the quarters ending September 30 and December 31, 2021, so that the twelve month calculation period commences July 1, 2021 on a cumulative basis, removal of the minimum EBITDA covenant and increase in the minimum Liquidity covenant from $7 million to $10 million. The Company's lenders have also agreed to waive the obligation to apply the net proceeds from the Offering to repay debt provided that the proceeds are deposited in an account with one of the lenders not later than September 1, 2021. A copy of the amendments will be available under the Company's SEDAR profile on www.sedar.com.
https://www.newswire.ca/news-releases/baylin-announces-financial-results-for-the-second-quarter-of-2021-and-10-million-private-placement-857147544.html