Sequans Communications (SQNS) Announces $50 Million Financing to Strengthen Balance Sheet
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Sequans Communications S.A. (NYSE: SQNS), leading developer and provider of 5G and 4G solutions for broadband, critical, and massive IoT, announced today the signing of a $50 million private financing with Lynrock Lake Master Fund LP, a fund managed by Lynrock Lake LP (“Lynrock Lake”), an investment management firm with approximately $1.2 billion of assets under management. The financing consists of $10 million of American Depository Shares (ADS) and $40 million principal amount of convertible debt. The financing is scheduled to close April 9, 2021.
“A stronger balance sheet improves Sequans' standing as we accelerate our Massive IoT business and engage with potential strategic partners interested in our 5G technology. Increased cash on our balance sheet also provides the Company with additional working capital to manage the ongoing component and supply chain dynamics,” said Georges Karam, Sequans CEO. “We are delighted to secure this financing with Lynrock Lake, an existing shareholder of Sequans. Lynrock Lake’s long-term, value-oriented investment strategy and experience in the semiconductor industry aligns with our goals to maximize opportunities in 5G/4G Massive IoT and Broadband IoT and to improve long-term shareholder value."
“Sequans is pursuing an aggressive 5G product roadmap for Broadband and Critical IoT, partially funded by strategic partners and investment from the French government,” said Cynthia Paul, Chief Investment Officer of Lynrock Lake. “We are excited to partner with Sequans to strengthen their capital structure and improve their strategic positioning as they engage with new and existing partners and suppliers.”
The $50 million financing includes the sale of $10 million of ADS priced at $5.50 per ADS and $40 million of convertible debt that converts into the Company’s ADS at a conversion price of $7.66. The convertible debt matures in three years and pays interest annually at an interest rate of 5.0625% for cash payments or 6% for Payment in Kind (PIK) accruals.
Sequans retains an option to call the convertible debt under certain circumstances after 12 months, either in full or in part, subject to a 9.9% ownership limit for Lynrock Lake. Lynrock Lake has not requested a board seat.
The primary use of proceeds will be the repayment of $11.7 million in convertible debt and accrued interest due April 14, 2021, if not converted, and early repayment of €6 million ($7 million) in euro-based debt. The remaining proceeds will be used for general corporate purposes.
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