The
information contained within this announcement is deemed by the
Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU)
596 / 2014 which forms part of United Kingdom law by virtue of the
European Union (Withdrawal) Act 2018. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
6 March 2024
Sondrel (Holdings)
plc
("Sondrel", the "Company" and together with its subsidiaries
the "Group")
Convertible Loan Note and
Exclusivity Agreement
Further to the announcement on 1
March 2024, Sondrel is pleased to announce that it has entered into
a £874,600 ("Principal
Amount") secured 15% convertible loan agreement (the
"Loan") with ROX Equity
Partners Limited ("ROX"), a
UK-based private equity firm and long term investor specialising in
emerging technology companies. The Loan has been entered into to
enable the Group to meet immediate working capital requirements
(the "Loan Agreement"). The
proceeds of the Loan are expected to be received by the Company on
6 March 2024 and will be utilised to meet the Group's February 2024
payroll and certain overdue supplier obligations.
The Principal Amount of the Loan
(excluding any interest accrued or compounded) is convertible into
ordinary shares of £0.001 in the Company ("Ordinary Shares") at the discretion of
ROX or, if earlier, automatically on completion of a proposed
future equity fundraise by the Company to raise gross proceeds of a
minimum of £6.5 million at a price of 10 pence per new Ordinary
Share (the "Fundraise"). In
each instance, the conversion price will be 10 pence per Ordinary
Share ("Conversion
Shares").
Under the Loan Agreement and prior
to any Conversion, the Company must pay daily accrued interest at a
rate of 15% per annum quarterly on the last day of March, June,
September and December (each an "Interest Payment Date") with the Loan
and any unpaid interest being repayable in full on the third
anniversary of the drawdown date. If the Company is unable to pay
such interest (by reason of actual or anticipated financial
difficulties), then the Company may, with the prior consent of ROX
(acting reasonably), elect that on each such Interest Payment Date,
all interest that has accrued during the relevant period will
compound (on the basis that such compounded interest together with
the principal will bear interest) and will be payable to ROX upon
repayment of the Loan.
The Loan Agreement provides for
certain events of default including, but not limited to, the
Company failing to satisfy the conditions to the Fundraise
referenced in the Exclusivity Agreement or to complete the
Fundraise within 6 months of the drawdown date or the Company (or
any other relevant member of the Group) failing to agree with its
largest supplier new payment terms (which are acceptable to the
ROX) within 90 days of the date of the Loan Agreement.
The Company's UK subsidiaries,
Sondrel Limited and Sondrel (SOC Solutions) Ltd (the "Subsidiaries"), have each entered into
a debenture and deed of guarantee with ROX on an all monies basis
which therefore covers monies owing under the Loan Agreement and
any other amounts owing to ROX by the Company and/or those
Subsidiaries.
Exclusivity Agreement
As previously announced, and
notwithstanding the entry of the Loan Agreement, the Company
requires additional funding to meet the Group's working capital
requirements. Sondrel has also entered into an exclusivity
agreement with ROX, granting ROX the right to participate,
alongside existing shareholders, in the Fundraise ("Potential Investment").
The Company's retail shareholders
will be provided with access to the Fundraise through a retail
offer to raise gross proceeds of not less than £0.5m at the same
price as the Potential Investment. ROX's participation in the
Fundraise is conditional upon, inter alia, obtaining shareholder
and regulatory approvals (as detailed below) and also the
completion of satisfactory due diligence.
Should ROX proceed with the
Potential Investment, the Company has agreed that ROX will have the
right to subscribe for new Ordinary Shares representing (initially,
and pending the necessary waiver of rule 9 of the City Code on
Takeovers and Mergers (the "Code") and approval of the Company's
shareholders to exceed this level ("Rule 9 Waiver") 29.9 per cent.
("Placing Shares") of the
Company's issued ordinary share capital as enlarged by the
Fundraise ("Enlarged Issued Share
Capital") and will, depending on the level of existing
shareholders' participation in the Fundraise and subject to receipt
of the Rule 9 Waiver, subscribe for up to a total of 65,000,000 new
Ordinary Shares at a price of 10 pence per share. Therefore,
subject to the relevant conditions being fulfilled and the terms of
the Fundraise being agreed, the Fundraise is guaranteed to be fully
subscribed. ROX's maximum commitment to acquire up to
65,000,000 new Ordinary Shares includes the Conversion Shares and
is subject to the regulatory and other approvals described
below.
Under the terms of the Exclusivity
Agreement, ROX will have the exclusive right to participate in the
Potential Investment until 30 September 2024 or, if earlier, the
date of termination of the agreement or the conclusion of
definitive agreements in respect of the Fundraise. This
period of exclusivity has been agreed in order to give the parties
sufficient time to obtain the necessary regulatory approvals
described below.
Director / board observer appointment right and relationship
agreement
Under the terms of the Loan
Agreement and the Exclusivity Agreement, ROX has been provided with
the right, but not the obligation, to nominate one director or an
observer to the board of directors of the Company.
In addition, should ROX proceed with
the Potential Investment, ROX will enter into a relationship
agreement with the Company to regulate the relationship between the
Company pursuant to which ROX shall give undertakings for the
purpose of ensuring that the business of the Company can be carried
on independently and for the benefit of all shareholders and
accordingly is suitable for AIM.
Regulatory and other approvals
The Potential Investment is
subject to approval of the Secretary of State pursuant to the
National Security and Investments Act 2021 ("NSIA") ("NSIA Approval"). In the event that NSIA
Approval is not obtained by ROX, it will only be able to subscribe
for up to 25% of the Enlarged Issued Share Capital.
The Code applies to the Company.
Under Rule 9 of the Code, any person who acquires an interest in
shares which, taken together with shares in which that person or
any person acting in concert with that person is interested, carry
30% or more of the voting rights of a company which is subject to
the Code is normally required to make an offer to all the remaining
shareholders to acquire their shares. Accordingly, the Company have
undertaken, if necessary (depending on the extent to which existing
shareholders elect to participate in the Fundraise and accordingly
what percentage of the Enlarged Issued Share Capital ROX stands to
acquire), to seek the Rule 9 Waiver.
Further funding
Due to the need to obtain regulatory
approvals, it is not anticipated that the conditions to the
Potential Investment will be satisfied prior to the end of March
2024. In order to assist in meeting further working capital
requirements of the Company, ROX has agreed (subject to a number of
conditions) to enter into further convertible loan(s) with the
Company (on similar terms to the Loan) which will require
shareholder approval to provide authority to allot the requisite
number of new Ordinary Shares that may be issued pursuant to the
conversion of such further loans. A circular, containing a notice
of general meeting, to obtain such shareholder approvals will be
despatched in due course to provide the requisite authorities and
further announcements will be made, as appropriate, in due
course.
There can be no certainty that the conditions to the Potential
Investment will be satisfied or that ROX will participate in the
Potential Investment or that ROX will provide any further funding
to the Company. Following entry of the Exclusivity Agreement, the
Company has undertaken (subject to ROX not withdrawing from
negotiations with the Company) not to solicit other forms of
investment from third parties prior to 30 September 2024 save for
engaging with the Company's existing shareholders in connection
with their participation in the Fundraise. Should ROX not proceed
with the Potential Investment and/or provide interim additional
funding prior to completion of the Fundraise, the Company will not
have sufficient working capital resources to meet its immediate
requirements.
Statement from Graham Curren
(CEO of Sondrel)
"This agreement and convertible loan note with ROX provides
the Group with immediately available funds with which to meet the
balance of the Group's February 2023 payroll and certain overdue
supplier obligations. We look forward to working with ROX and the
Company's shareholders in advancing the wider fundraise which would
give the Group sufficient funds to support it through to a positive
trading cash flow position by the end of the year to 31 December
2024. We remain committed to delivering on our growth
strategy, are confident that our robust pipeline and potential for
material production revenues in the future and I would like to
thank the Group's stakeholders for their continued
support."
Further announcements, will be made
as appropriate, in due course.
For further information:
Sondrel (Holdings) plc
|
Via
Buchanan
|
Graham Curren, CEO
|
Tel: +44
(0) 20 7466 5000
|
Nick Stone, Interim CFO
|
|
|
|
Cavendish Capital Markets Limited
|
Tel: +44
(0) 20 7220 0500
|
Ben Jeynes / Katy Birkin / George
Lawson - Corporate Finance
|
|
Michael Johnson - Sales
|
|
|
|
Buchanan Communications
|
Tel: +44
(0) 20 7466 5000
|
Chris Lane / Stephanie Whitmore /
Abby Gilchrist
|
sondrel@buchanan.uk.com
|
About Sondrel
Sondrel is a UK-based fabless
semiconductor company specialising in high end, complex digital
Application Specific Integrated Circuits (ASICs) and System on
Chips (SOCs). It provides a full turnkey service in the design,
prototyping, testing, packaging and production of ASICs and
SoCs.
The Company is one of only a few
companies capable of designing and supplying the higher-spec chips
built on the most advanced semiconductor technologies, selling into
a range of hyper growth end markets such as high-performance
computing, automotive, artificial intelligence, VR/AR, video
analytics, image processing, mobile networking and data
centres. Sondrel designs have enabled products by leading
technology brands including Apple (iPhone), Sony (PlayStation),
Meta's (Oculus), Samsung, Google and Sony smartphones, JVC
(prosumer camcorders), Tesla and Mercedes-Benz cars.
Sondrel is well-established, with a
20-year track record of successful delivery, supported by long
standing ecosystem partnerships including Arm, TSMC and Samsung.
Headquartered in the UK, Sondrel has a global presence with offices
in UK, USA, China, India and Morocco.
For more information please
visit: ir.sondrel.com .