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MidCap Financial, Others Provide $6.5MM Term Loan to Spectra7

March 31, 2016, 07:41 AM
Filed Under: Telecom

Spectra7 Microsystems Inc. announced that the company has closed a $6.5 million senior secured term loan facility with Midcap Financial and certain lenders.

The loan facility is for a 36 month term with interest payable monthly in arrears at an annual rate of one month LIBOR plus 8.50%, subject to a LIBOR floor of 0.50%. Interest only is payable for the first 12 months of the term with the principal and interest thereafter amortized on a straight-line basis until the maturity date. The loan facility is secured by a first charge over all of the existing and subsequently acquired assets of the company and each of its subsidiaries other than its subsidiary located in China. The company expects to use the net proceeds from the facility for ongoing working capital requirements and to repay existing bank indebtedness.

Pursuant to the terms of the facility, the company has issued to the lenders an aggregate of 855,010 common share purchase warrants (each, a "Warrant") with each Warrant being exercisable into one common share in the capital of the Company for a period of five years at a price of CDN$0.60 per share. In accordance with applicable securities legislation, the Warrants are subject to a statutory hold period of four months and one day expiring on July 31, 2016.

Tony Stelliga, President and Chief Executive Officer of the Company, stated that, "this funding bolsters the Company's available capital resources into 2017 as we continue to accelerate our engagement in additional vertical markets with our patented interconnect technology. In addition, we see this as a positive, non-dilutive way to fund the production ramp of our new products. We are pleased to partner with Midcap Financial -- a world class lending institution -- and appreciate their confidence in our unique business model."

M Partners Inc. acted in an advisory capacity to the Company in connection with the financing.

Spectra7 Microsystems Inc. is a high performance consumer connectivity company delivering unprecedented bandwidth, speed and resolution to enable disruptive industrial design for leading consumer electronics manufacturers in virtual reality, augmented reality, wearable computing, data centers and ultra-HD 4K/8K displays. Spectra7 is based in Palo Alto, California with design centers in Markham, Ontario, Little Rock, Arkansas and Cork, Ireland.

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