Eguana Technologies (TSXV:EGT) secured traditional financing, revealing this morning to have entered into a loan agreement with Western Technology Investment. The financing will see the company borrow up to US$10.0 million from the Silicon Valley-based company.
The loan will consist of two tranches of financing, each in the amount of US$5.0 million. The first installment should be drawn this week, while the second will be available until August 31, 2022.
The proceeds of the financing must be used for working capital purposes.
“We accelerated the full turnkey manufacturing and supply chain activities of Omega EMS and this growth capital will be immediately used to support further increases in production capacity, Enfuse launch volumes and the supply of battery modules. WTI has remained a key partner for Eguana for several years, recognizing the strategic market position the team has established and the near-term revenue opportunities with storage solutions and the launch of the microinverter.said CEO Justin Holland.
For the second tranche, certain conditions must be met to access the capital, including revenues of $14.0 million or more recorded for the period May 1, 2022 to July 31, 2022 – suggesting that the company could finally s expect an increase in income this year. The company must also have at least $10.0 million in unrestricted cash at the time of the second draw.
The loan will bear interest at 12% per annum, with interest-only payments for the first six months of the loan. After the first six months, equal payments of principal and interest must be made for a period of 30 months. The debt is secured by first ranking security interests on the company’s assets.
In consideration for the loan, the company issued 4.9 million common stock warrants, which contain an exercise price of $0.355 and a five-year expiration. Half of the warrants will vest immediately, while the other half will vest upon the second drawdown on the loan. Unexercised vested warrants are exchangeable for up to US$1.5 million at the earliest between a liquidity event or September 30, 2025.
Eguana Technologies last traded at $0.375 on the TSX Venture Exchange.
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