SAN JOSE, Calif., Oct. 15, 2021 /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, announces that it intends to increase the size of the Company's previously announced brokered private placement to $12 million (the "Private Placement"). The Private Placement will consist of the issuance of approximately 9,090,909 common shares (the "Common Shares") at a price of $1.32 per Common Share. All dollar amounts in this news release are denominated in Canadian dollars unless otherwise indicated.
The Company has engaged Cormark Securities Inc. (the "Agent") to offer the Common Shares for sale on a best efforts agency basis. The Agent is entitled to receive a cash commission equal to 6% of the aggregate proceeds raised in the Private Placement (excluding proceeds raised from investors on the president's list) and broker warrants entitling the Agent to purchase such number of Common Shares as is equal to 6% of the aggregate of number of Common Shares issued in the Private Placement (excluding Common Shares issued to investors on the president's list) at $1.32 per Common Share for a period of two years from the closing.
The Company has granted the Agent a 10% over-allotment option to offer an additional 909,091 Common Shares for sale, exercisable in whole or in part at any time up until closing of the Private Placement. In the event that the over-allotment option is exercised in full, the aggregate gross proceeds of the Private Placement will be $13.2 million.
"Investor response to our Private Placement significantly exceeded our expectations, including both U.S. and Canadian investors, and we elected to upsize the transaction to approximately $12 million. The additional working capital will enable us to further increase production at our semiconductor foundries and meet rising customer demand at this exciting inflection point for our Active Copper Cable solutions" said Raouf Halim, Chief Executive Officer of Spectra7. "As customer orders continue to accelerate beyond the US$7.2 million reported at the start of the fourth quarter, our revenue visibility extends well into 2022. I have never been more confident in our business outlook and believe that the future is bright for Spectra7."
The Private Placement is expected to close on or about October 26, 2021. The net proceeds from the Private Placement are intended to be used for working capital to support revenue growth and for general corporate purposes.
Pursuant to Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101"), the Private Placement constitutes a "related party transaction" as insiders of the Company are expected to subscribe for up to 25% of the Common Shares to be sold in the Private Placement. The Company is relying on exemptions from the formal valuation and minority approval requirements of MI 61-101. The Company did not file a material change report more than 21 days before the expected closing of the Private Placement as the details of the related parties' participation in the Private Placement have not been settled.