SMTC Corporation (“SMTC” or the “Company”) (Nasdaq:SMTX), a global
electronics manufacturing services provider, today announced the
closing of its previously announced (i) rights offering (the
“Rights Offering”) to existing stockholders and the holders of the
Company’s outstanding warrants (together, the “Holders”) as of the
close of business on May 24, 2019, which expired at 5:00 PM Eastern
Time on June 20, 2019, and (ii) registered direct offering (the
“Registered Direct Offering” and, together with the Rights
Offering, the “Offerings”) of common stock directly to certain
investors (collectively, the “Registered Direct Offering
Purchasers”). The Company received aggregate gross proceeds
from the Offerings of approximately $14.6 million, comprised of (i)
approximately $9.1 million in gross proceeds from the Rights
Offering and (ii) approximately $5.4 million in gross proceeds from
the Registered Direct Offering.
SMTC ultimately intends to use the net proceeds from the
Offerings to repay the $12.0 million of borrowings outstanding
under its term loan B facility and the remainder for payment on
other outstanding debt.
Rights Offering
While Holders exercised rights to purchase an aggregate of
$13,184,307 of shares of common stock (before considering backstop
agreements) at the subscription price of $3.14 per share, the
Maximum Offering amount permitted for the Rights Offering was
capped at $9,135,978 (the “Maximum Offering Amount”), which
represented approximately 144% of the Maximum Offering Amount. A
total of 1,943,705 shares of common stock were issued pursuant to
Holders’ basic subscription privilege and a total of 965,842 shares
of common stock were issued pursuant to Holders’ over-subscription
privilege, for a total of 2,909,547 shares in the Rights Offering,
which represented the Maximum Offering Amount. As a result, the
number of shares sold pursuant to over-subscription privileges to
Holders who exercised their over-subscription privilege was
prorated according to the formulas described in the prospectus
supplement relating to the Rights Offering.
Because the Company received aggregate subscriptions pursuant to
the basic subscription privilege and the over-subscription
privilege equal to the Maximum Offering Amount, the Company did not
utilize the previously announced backstop commitments received from
certain stockholders and a non-stockholder of the Company.
Furthermore, Red Oak Partners, LLC and Wynnefield Funds, the
Company’s largest stockholders, members of the Company’s board of
directors and members of the Company’s executive management team
all purchased shares of common stock in the Rights Offering.
The shares of common stock purchased in the Rights Offering were
distributed to applicable offering participants through the
Company’s transfer agent or through the clearing systems of The
Depository Trust Company, commencing, June 27, 2019. No fractional
shares were issued.
Registered Direct Offering
Furthermore, on June 28, 2019, the Company also issued and sold
an aggregate of 1,732,483 shares of common stock (the “Registered
Direct Offering Shares”) to the Registered Direct Offering
Purchasers pursuant to the common stock purchase agreement, dated
May 23, 2019, by and between the Company and the Registered Direct
Offering Purchasers, at a purchase price of $3.14 per share.
This press release does not constitute an offer to sell or a
solicitation of an offer to buy the securities in the Offerings,
nor will there be any sale of these securities in any jurisdiction
in which an offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of such
jurisdiction. The prospectus supplement and accompanying prospectus
describing the terms of the Rights Offering is not an offer to sell
the Registered Direct Offering Shares and the prospectus supplement
and accompanying prospectus describing the terms of the Registered
Direct Offering is not an offer to sell the Rights and shares of
common stock issued in the Rights Offering upon exercise of the
Rights.
Following the completion of the Offerings, the Company has
27,995,588 shares of common stock outstanding. “I want to thank our
shareholders who participated in the Rights Offering and those who
invested in the Registered Direct Offering as we continue to build
a stronger Company,” said Edward Smith, SMTC’s President and CEO.
“At this time, we believe that the Company should not need to issue
additional equity in the foreseeable future as these successful
offerings allow us to repay our term loan B facility and make
payments on other outstanding debt, which we anticipate will
position the Company for further growth.”
About SMTC
SMTC Corporation was founded in 1985 and acquired MC Assembly
Holdings, Inc. in November 2018. Following this acquisition,
SMTC has more than 50 manufacturing and assembly lines in United
States, China and Mexico which creates a powerful low-to-medium
volume, high-mix, end-to-end global electronics manufacturing
services (EMS) provider. With local support and expanded
manufacturing capabilities globally, including fully integrated
contract manufacturing services with a focus on global original
equipment manufacturers and emerging technology companies,
including those in the Defense and Aerospace, Industrial, Power and
Clean Technology, Medical and Safety, Retail and Payment Systems,
Semiconductors and Telecom, Networking and Communications; and Test
and Measurement industries. As a mid-size provider of end-to-end
EMS, SMTC provides printed circuit boards assemblies production,
systems integration and comprehensive testing services, enclosure
fabrication, as well as product design, sustaining engineering and
supply chain management services. SMTC services extend over the
entire electronic product life cycle from the development and
introduction of new products through to the growth, maturity and
end-of-life phases.
SMTC is a public company incorporated in Delaware with its
shares traded on the Nasdaq Global Market under the symbol “SMTX”
and was added to the Russell Microcap® Index in 2018. For further
information on SMTC Corporation, please visit our website at
www.smtc.com.
Forward-Looking Statements
This press release contains forward-looking statements that
involve estimates, assumptions, risks and uncertainties.
Forward-looking statements include, but are not limited to,
statements related to the Offerings, the expected use of the net
proceeds from the Offerings, the timing of any future equity
offerings by the Company, the Company’s future financial
performance, business strategy, financial condition and plans and
objectives of management for future operations. The risks and
uncertainties relating to the Company and the Offerings include
general market conditions, the Company’s ability to complete the
Offerings on favorable terms, or at all, as well as other risks
detailed from time to time in the Company’s SEC filings, including
in its Annual Report on Form 10-K, filed with the SEC on March 15,
2019, its Quarterly Reports on Form 10-Q and its Current Reports on
Form 8-K. These documents contain important factors that could
cause actual results to differ from current expectations and from
forward-looking statements contained in this press release. These
forward-looking statements speak only as of the date of this press
release and the Company undertakes no obligation to publicly update
any forward-looking statements to reflect new information, events
or circumstances after the date of this press release.
Investor Relations contact
Peter SeltzbergManaging DirectorDarrow Associates,
Inc.516-419-9915pseltzberg@darrowir.com
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