Eguana Technologies (TSXV: EGT) has obtained some traditional financing, this morning revealing it has 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 firm.
The loan is to consist of two tranches of funding, with each being US$5.0 million in size. The first tranche is expected to be drawn this week, while the second will be made available through to August 31, 2022.
Proceeds from the financing are to be used for working capital purposes.
“We have expedited full turnkey manufacturing and supply chain activities to Omega EMS and this growth capital will be immediately utilized to support further production capacity increases, Enfuse launch volumes, and battery module supply. WTI has remained a key partner for Eguana for a number of years, recognizing the strategic market position the team has put in place and the near term revenue opportunities with both the storage solutions and the micro inverter launch,” said CEO Justin Holland.
For the second tranche, certain conditions must be met to access the capital, including revenue of $14.0 million or more being recorded for the period from May 1, 2022 through July 31, 2022 – suggesting that the company might finally be expecting a revenue ramp this year. The company must also have unrestricted cash of at least $10.0 million at the time of the second draw.
The loan will bear interest at 12% per annum, with interest-only payments to be made for the first six months of the loan. After the first six months, equal principal and interest payments are to be made for a period of 30 months. The debt is secured via first priority security on the assets of the company.
As part of consideration for the loan, the company has issued 4.9 million common share purchase warrants, which contain an exercise price of $0.355 and an expiry of five years. Half of the warrants will vest immediately, while the other half will vest at the time of the second drawdown on the loan. The vested unexercised warrants are exchangeable for an amount of up to US$1.5 million at the earlier of a liquidity event or September 30, 2025.
Eguana Technologies last traded at $0.375 on the TSX Venture.
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