SMTC Corporation (“SMTC” or the “Company”) (Nasdaq:SMTX), a global
electronics manufacturing services provider, today announced that
it intends to raise up to $14.6 million of aggregate gross proceeds
via (i) a 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 (the “Record Date”), to purchase up to approximately $9.1
million of shares of the Company’s common stock and (ii) a
registered direct offering (the “Registered Direct Offering” and,
together with the Rights Offering, the “Offerings”) of
approximately $5.4 million of its common stock directly to certain
investors (the “Registered Direct Offering Investors”), pursuant to
a common stock purchase agreement (the “
Purchase
Agreement”) entered into between the Company and the
Registered Direct Offering Investors.
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, if any, for
general corporate purposes.
Up to $9.1 Million Rights Offering
Under the proposed Rights Offering, the Company is distributing
to Holders as of the Record Date, at no-charge, one
non-transferable subscription right (each, a “Right”) to purchase
one share of the Company’s common stock for each 8.2 shares of
common stock owned by such Holder on the Record Date (the “Basic
Subscription Privilege”). Each Right will be exercisable at a
price per share (the “Subscription Price”) equal to $3.14.
Pursuant to the terms of the Rights Offering, the Rights, in the
aggregate, may be exercised for a maximum of $9,135,978 of
subscription proceeds (the “Maximum Offering Amount”). If the
Rights Offering is not fully subscribed and a Holder fully
exercises its Basic Subscription Privilege, the Holder may also
exercise its Rights to purchase common stock at the Subscription
Price that was not subscribed for by other holders of Rights under
the Rights Offering (the “Over-Subscription Privilege”). The
Over-Subscription Privilege will be subject to proration to ensure
that the aggregate gross proceeds raised in the Rights Offering do
not exceed the Maximum Offering Amount. If any proration is
necessary, subscriptions for shares subscribed for pursuant to the
Over-Subscription Privilege will be prorated. No fractional shares
will be issued. The Subscription Price of $3.14 is a 15%
discount to the 10-day volume-weighted average price of the
company’s common stock on the Nasdaq Global Market as of May 14,
2019. All Rights will expire if they are not exercised by 5:00 PM
Eastern Time on June 20, 2019, unless the Rights Offering is
extended. There is no minimum number of Rights that must be
exercised in the Rights Offering, no minimum number that any Holder
must exercise, and no minimum number of shares of common stock that
the Company will issue at the closing of the Rights Offering. Once
made, all exercises of Rights are irrevocable. The Company
may extend the subscription period up to an additional thirty (30)
days, at its sole discretion.
Neither the Company nor its board of directors is making any
recommendation regarding Holders’ exercise of their Rights.
The Company has received verbal, non-binding commitments from
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, who, in the
aggregate, have expressed their intent to exercise their Rights to
purchase at least approximately $3.5 million of common stock, which
represents the maximum amount of their aggregate Rights under the
Basic Subscription Privilege and approximately 38.0% of the total
number of Rights available for purchase in the Rights Offering.
A shelf registration statement relating to the Rights and shares
of common stock to be issued in the proposed Rights Offering upon
exercise of the Rights was previously filed with the Securities and
Exchange Commission (the “SEC”) and is effective. A prospectus
supplement and accompanying prospectus describing the terms of the
Rights Offering have been filed with the SEC. Copies of the
prospectus supplement and the accompanying prospectus relating to
the Rights and shares of common stock to be issued in the proposed
Rights Offering may be obtained for free by visiting the SEC’s
website at www.sec.gov.
Holders should carefully read the prospectus supplement and
accompanying prospectus describing the terms of the Rights Offering
because they contain important information about the Company and
the Rights Offering. The prospectus supplement and the accompanying
prospectus, including the Rights Certificate and instructions about
how to exercise and pay for the Rights exercised, will be mailed to
all Holders as of the Record Date, commencing May 31, 2019, and
simultaneously provided to all brokers, dealers, banks or other
nominees for distribution to all beneficial Holders.
$5.4 Million Registered Direct Offering
On May 23, 2019, the Company entered into the Purchase Agreement
with the Registered Direct Offering Investors to sell an aggregate
of 1,732,483 shares of the Company’s common stock (the “Registered
Direct Offering Shares”) at a public offering price per share of
$3.14, for total gross proceeds of approximately $5.4 million. The
offering of the Registered Direct Offering Shares was made without
an underwriter or placement agent. The closing of the Registered
Direct Offering is subject to the satisfaction of customary closing
conditions, including the closing of the Rights Offering.
A shelf registration statement relating to the Registered Direct
Offering Shares to be issued in the proposed Registered Direct
Offering was previously filed with the SEC and is effective. A
prospectus supplement and accompanying prospectus describing the
terms of the Registered Direct Offering have been filed with the
SEC. Copies of the prospectus supplement and the accompanying
prospectus relating to the Registered Direct Offering Shares to be
issued in the proposed Registered Direct Offering may be obtained
for free by visiting the SEC’s website at www.sec.gov.
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 to be issued in the proposed Rights Offering upon
exercise of the Rights.
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 proposed Offerings, the amount of
proceeds expected from the proposed Offerings, the timing and
certainty of completion of the Offerings, the expected
participation of certain existing stockholders in the Rights
Offering and the price per share at which Rights may be exercised
in the Rights Offering. 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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