Sequans Announces $50 Million Financing to Strengthen Balance Sheet
April 07 2021 - 6:00AM
Business Wire
Use of proceeds to include repayment of
convertible debt due April 14, 2021, if not converted; repayment of
euro-based venture debt, and general corporate purposes
Sequans Communications S.A. (NYSE: SQNS), leading developer and
provider of 5G and 4G solutions for broadband, critical, and
massive IoT, announced today the signing of a $50 million private
financing with Lynrock Lake Master Fund LP, a fund managed by
Lynrock Lake LP (“Lynrock Lake”), an investment management firm
with approximately $1.2 billion of assets under management. The
financing consists of $10 million of American Depository Shares
(ADS) and $40 million principal amount of convertible debt. The
financing is scheduled to close April 9, 2021.
“A stronger balance sheet improves Sequans' standing as we
accelerate our Massive IoT business and engage with potential
strategic partners interested in our 5G technology. Increased cash
on our balance sheet also provides the Company with additional
working capital to manage the ongoing component and supply chain
dynamics,” said Georges Karam, Sequans CEO. “We are delighted to
secure this financing with Lynrock Lake, an existing shareholder of
Sequans. Lynrock Lake’s long-term, value-oriented investment
strategy and experience in the semiconductor industry aligns with
our goals to maximize opportunities in 5G/4G Massive IoT and
Broadband IoT and to improve long-term shareholder value."
“Sequans is pursuing an aggressive 5G product roadmap for
Broadband and Critical IoT, partially funded by strategic partners
and investment from the French government,” said Cynthia Paul,
Chief Investment Officer of Lynrock Lake. “We are excited to
partner with Sequans to strengthen their capital structure and
improve their strategic positioning as they engage with new and
existing partners and suppliers.”
The $50 million financing includes the sale of $10 million of
ADS priced at $5.50 per ADS and $40 million of convertible debt
that converts into the Company’s ADS at a conversion price of
$7.66. The convertible debt matures in three years and pays
interest annually at an interest rate of 5.0625% for cash payments
or 6% for Payment in Kind (PIK) accruals.
Sequans retains an option to call the convertible debt under
certain circumstances after 12 months, either in full or in part,
subject to a 9.9% ownership limit for Lynrock Lake. Lynrock Lake
has not requested a board seat.
The primary use of proceeds will be the repayment of $11.7
million in convertible debt and accrued interest due April 14,
2021, if not converted, and early repayment of €6 million ($7
million) in euro-based debt. The remaining proceeds will be used
for general corporate purposes.
Forward Looking Statements
This press release contains forward-looking statements regarding
the expecting timing of the closing of the Transaction and use of
proceeds. All statements other than present and historical facts
and conditions contained in this release, including any statements
regarding business strategy and plans, expectations for Massive IoT
sales, and our objectives for future operations, are
forward-looking statements (within the meaning of the Private
Securities Litigation Reform Act of 1995, Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended). These statements are
only predictions and reflect our current beliefs and expectations
with respect to future events and are based on assumptions and
subject to risk and uncertainties and subject to change at any
time. We undertake no obligation to update the information made in
this release in the event facts or circumstances subsequently
change after the date of this press release. We operate in a very
competitive and rapidly changing environment. New risks emerge from
time to time. Given these risks and uncertainties, you should not
rely on or place undue reliance on these forward-looking
statements. Actual events or results may differ materially from
those contained in the projections or forward-looking statements.
In addition to the risk factors contained in our Form 20-F for the
fiscal year ended December 31, 2020, some of the factors that could
cause actual results to differ materially from the forward-looking
statements contained herein include, without limitation: (i) the
contraction or lack of growth of markets in which we compete and in
which our products are sold, (ii) unexpected increases in our
expenses, including manufacturing expenses, (iii) our inability to
adjust spending quickly enough to offset any unexpected revenue
shortfall, (iv) delays or cancellations in spending by our
customers, (v) unexpected average selling price reductions, (vi)
the significant fluctuation to which our quarterly revenue and
operating results are subject due to cyclicality in the wireless
communications industry and transitions to new process
technologies, (vii) our inability to anticipate the future market
demands and future needs of our customers, (viii) our inability to
achieve new design wins or for design wins to result in shipments
of our products at levels and in the timeframes we currently
expect, (ix) our inability to enter into and execute on strategic
alliances, (x) our ability to meet performance milestones under
strategic license agreements, (xi) the impact of natural disasters
on our sourcing operations and supply chain, (xii) our ability to
remediate material weaknesses in our internal controls relating to
controls over the accounting and presentation of complex,
non-routine and certain other transactions, including certain
revenue arrangements, (xiii) the impact of the coronavirus on the
ability to operate our business and research, production of our
products or demand for our products by customers whose supply chain
is impacted or whose operations have been impacted by government
shelter-in-place or similar orders, (xiv) the impact of the
coronavirus on capital markets and our ability to raise debt and
equity financing, and (xv) other factors detailed in documents we
file from time to time with the Securities and Exchange
Commission.
About Sequans
Sequans Communications S.A. (NYSE: SQNS) is a leading developer
and provider of 5G and 4G chips and modules for massive, broadband,
and critical IoT. For 5G/4G massive IoT applications, Sequans
provides a comprehensive product portfolio based on its flagship
Monarch LTE-M/NB-IoT and Calliope Cat 1 chip platforms, featuring
industry-leading low power consumption, a large set of integrated
functionalities, and global deployment capability. For 5G/4G
broadband and critical IoT applications, Sequans offers a product
portfolio based on its Cassiopeia Cat 4/Cat 6 4G and high-end
Taurus 5G chip platforms, optimized for low-cost residential,
enterprise, and industrial applications. Founded in 2003, Sequans
is based in Paris, France with additional offices in the United
States, United Kingdom, Finland, Israel, Hong Kong, Singapore,
Taiwan, South Korea, and China. Visit Sequans online at
www.sequans.com .
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Media Relations: Kimberly Tassin, +1.425.736.0569,
Kimberly@sequans.com Investor Relations: Kim Rogers, Hayden IR, +1
385.831.7337, Kim@haydenir.com
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