SAN
JOSE, Calif., March 7,
2025 /CNW/ -- Spectra7 Microsystems Inc. (TSXV: SEV)
(OTCQB: SPVNF) ("Spectra7"), a leader in high-performance
analog semiconductors for powering the AI revolution in broadband
connectivity markets, hyperscale data centers, and Spatial
Computing, is pleased to announce that it has entered into a
definitive agreement (the "Purchase Agreement") effective
today with Parade Technologies, Ltd. (TPEx: 4966.TWO)
("Parade"), an arm's length party and a leading
supplier of video display, touch controller, and high-speed
interface ICs, under which Parade will acquire substantially all of
the assets (the "Assets") of Spectra7 and its subsidiaries
(the "Sale Transaction"). The Assets include intellectual
property (IP), products, designs, inventory, and other specified
items.
The Sale Transaction will enable Parade to both continue
marketing Spectra7's existing advanced active cable product
portfolio and to leverage Spectra7's technology in new high speed
solutions. Parade anticipates that Spectra7's cutting-edge
SiGe-technology, achieving data speeds of 112 Gbps and higher, will
provide valuable support for Parade's efforts to expand into
high-growth markets such as data centers, AI-powered computing, and
next-generation consumer electronics. In addition, as part of the
acquisition, it is currently anticipated that a significant number
of Spectra7's employees will join Parade, ensuring continuity of
technical expertise and customer support.
"We are thrilled by this outcome and excited to close this
transaction. Spectra7's pioneering work and best-in-class Active
Copper Cable products have a great partner in Parade, a powerhouse
in the industry. Our customers, partners and industry will benefit
tremendously." – Omar Javaid, CEO of
Spectra7.
Purchase Price
The purchase price (the "Purchase Price") for the Assets
is US$9,000,000 (approximately
CDN$12,933,0001) in cash.
On closing (the "Closing") of the Sale Transaction, Parade
shall make a cash payment to Spectra7 equal to the Purchase Price,
less: (i) the Bridge Loans (as defined below), and (ii)
US$1,800,000 (approximately
CDN$2,586,600) (the "Escrow
Amount"). The Escrow Amount shall be deposited into escrow with
a third-party escrow agent to cover certain potential indemnity
claims by Parade until the date that is one year after the closing
of the Sale Transaction (the "Escrow Release Date"). There
can be no certainty as to the quantum of the Escrow Amount to be
released.
It is the intention of Spectra7 to distribute all of the
net proceeds received from the Sale Transaction to its shareholders
(the "Spectra7 Shareholders") in two special distributions
(each, a "Special Distribution"). The first Special
Distribution shall be equal to the proceeds received by Spectra7 at
the Closing (as defined below) less: (i) transaction costs
including legal fees, costs of the special meeting of Spectra7
Shareholders to be held to approve the Sale Transaction (the
"Meeting"), escrow agent fees and fees payable to the TSX
Venture Exchange (the "TSXV"), and applicable broker fees;
(ii) accounts payable and any employee severance and bonus costs;
(iii) funds used for Spectra7's ordinary course expenses prior to
Closing; and (iv) funds used by Spectra7 to continue to exist as a
public company until on or after the Escrow Release Date. The first
Special Distribution is estimated to be approximately US$3,300,000 (approximately CDN$4,742,100), or approximately CDN$0.018 per share based on the share
information below, and is expected to be made within seven days
after Closing. Assuming no further Bridge Loans above US$750,000 are required and the Escrow Amount is
released in full, the Second Distribution is estimated to be
US$1,800,000 (approximately
CDN$2,586,600) or approximately
CDN$0.01 per share, and is expected
to be made at the applicable time that funds are released from the
Escrow Amount.
As of the date of this release, the number of common shares of
Spectra7 outstanding (assuming the exercise in full of all of the
112,253,574 outstanding pre-funded warrants but excluding the
exercise or conversion of any other outstanding securities of
Spectra7 previously issued by Spectra7) is 255,008,208 common
shares. Based on the above estimates and the common share amounts
noted above, the total Special Distributions to the Spectra7
Shareholders is expected to be approximately US$5,100,000 (approximately CDN$7,328,700)
or approximately CDN$0.028 per share.
Each Special Distribution shall be made to the Spectra7
Shareholders of record as of the closing date of the Sale
Transaction.
Bridge Financing
Concurrently with the execution of the Purchase Agreement by the
parties, Parade has agreed to advance a loan to Spectra7 in the
amount of US$450,000 (approximately
CDN$646,650), with an additional loan
in the amount of US$300,000
(approximately CDN$431,100) to be
advanced on or about March 21, 2025
(collectively, the "Bridge Loans"), in order to assist
Spectra7 to maintain its operations and carry on its business until
Closing. The Bridge Loans (i) bear interest at the prevailing prime
rate; (ii) are secured against certain assets of Spectra7 and its
subsidiaries; and (iii) will be credited (including interest) at
Closing against the Purchase Price. In the event that the Sale
Transaction is not completed or the Purchase Agreement is
terminated, the Bridge Loans become immediately payable by Spectra7
to Parade.
Shareholder Approval and Recommendation of the Board of
Spectra7
The closing of the Sale Transaction is subject to various
conditions, including the approval of the TSXV and approval of at
least 66 2/3% of the votes cast by Spectra7 Shareholders at the
Meeting pursuant to the Business Corporations Act
(Ontario). The members of the
Board, after consultation with management and legal and financial
advisors, have approved the Sale Transaction and determined that
the Sale Transaction is in the best interests of Spectra7 and
recommend that Spectra7 Shareholders vote in favour of the Sale
Transaction at the Meeting.
Spectra7 has entered into voting and support agreements with
Spectra7 Shareholders holding an aggregate of 82,256,012 common
shares representing approximately 57.62% of the issued and
outstanding common shares of Spectra7, who have, among other
things, agreed to vote their common shares of Spectra7 in favour of
the Sale Transaction.
Additional details relating to the Sale Transaction, anticipated
value and timing of the Special Distributions and the quantum of
applicable transaction expenses will be set out in the management
information circular of Spectra7 (the "Circular") to be
mailed to Spectra7 Shareholders in connection with the Meeting.
The Meeting has been set for April 14,
2025. The Sale Transaction is expected to close in the
second quarter of 2025.
The Purchase Agreement
Under the terms of the Purchase Agreement, Parade has agreed to
acquire all of the Assets. The closing of the Sale Transaction is
subject to a number of customary conditions, including with respect
to the truth and accuracy of the parties' representations and
warranties and compliance with their respective covenants. A
termination fee of US$2,500,000
(approximately CDN$3,592,500) is payable by Spectra7 to Parade
should the Sale Transaction not close in the event that Spectra7
fails to receive Spectra7 Shareholder approval for the Sale
Transaction. Following Closing, Spectra7 has agreed not to engage
in the business of development, design and sale of semiconductor
products, including high speed analog devices (the
"Business"), and not to solicit any customers or clients of
the Business, or employees that were involved in the Business, for
a period of two years following the Closing. The Purchase Agreement
may be terminated by either Spectra7 or Parade if the Closing does
not occur on or before June 30, 2025
(the "Outside Date"); provided the terminating party is not
then in breach of its covenants, representations or warranties and
such breach is the principal cause that the Closing has not
occurred by the Outside Date.
Spectra7 has agreed to indemnify Parade for certain specified
matters, including breaches of its representations, warranties and
covenants in the Purchase Agreement, and certain other matters,
subject to certain customary limitations. In the event an
indemnification claim is made by Parade, they will have recourse to
the Escrow Amount.
Craig-Hallum Capital Group LLC and The Benchmark Company
LLC acted as financial advisors to Spectra7 in connection
with the Sale Transaction, and are together entitled to a
transaction fee equal to US$1,000,000
(approximately CDN$1,437,000) on
Closing.
Copies of the Purchase Agreement and the Circular will be filed
with Canadian securities regulators and will be available at
www.sedarplus.ca. Spectra7 Shareholders are urged to read the
Circular and the other relevant materials when they become
available, as such materials will contain important information
regarding the Sale Transaction.
ABOUT SPECTRA7 MICROSYSTEMS INC.
Spectra7 is a leader in high-performance analog semiconductors
for powering the AI revolution in broadband connectivity markets,
hyperscale data centers, and Spatial Computing. Spectra7 is based
in San Jose, California with a
design center in Cork, Ireland and
a technical support location in Dongguan,
China ( https://www.spectra7.com/).
ABOUT PARADE TECHNOLOGIES, LTD.
Parade Technologies, Ltd. is a leading supplier of mixed-signal
ICs for a variety of popular display and high-speed interface
standards used in computers, consumer electronics and display
panels. The fabless semiconductor company was founded in 2005 and
publicly listed on Taipei Exchange ("TPEx") in 2011 (stock
code: 4966). Parade's portfolio of IC products serves the growing
demand for HDMI™, DisplayPort™, SATA, and USB ICs for display,
storage and interface applications. In addition to being a
technology innovator, Parade is an active participant and leader in
industry standards-setting organizations.
Parade Technologies, Inc., a wholly owned US-based subsidiary of
Parade Technologies, Ltd., is a member of VESA (Video Electronics
Standard Association). Parade Technologies, Inc. has made key
contributions to the development of VESA's DisplayPort™ digital
video interface standard.
Parade leverages its close relationships with market leading
Tier-1 OEMs to develop ICs that provide unique system capabilities.
Many of the company's devices integrate proprietary technologies
that offer superior system signal integrity, advanced system
integration and enhanced power efficiency. As a result of the
company's "standards-plus" design philosophy, Parade ICs have been
designed into products offered by nearly every leading computer and
display vendor worldwide. ( https://www.paradetech.com/ )
For further information please contact:
Darrow Associates
Matt Kreps
214-597-8200
ir@spectra7.com
Spectra7 Microsystems Inc.
Omar Javaid
Chief Executive Officer
ir@spectra7.com
Forward-Looking Statements
Statements in this press release contain forward-looking
information. Such forward-looking information may be identified by
words such as "anticipates", "plans", "proposes", "estimates",
"intends", "expects", "believes", "may" and "will". The
forward-looking statements included in this press release,
including statements regarding the Sale Transaction, the receipt of
necessary Spectra7 Shareholder and TSXV approvals and satisfaction
of other closing conditions, the anticipated timing of the meeting
of Spectra7 Shareholders to approve the Sale Transaction and timing
of Closing, the release of the Escrow Amount and the ultimate
quantum and timing of the distributions payable to
Spectra7 Shareholders upon Closing and release of the Escrow
Amount.
In respect of the forward-looking statements and information
included in this press release, Spectra7 has provided such in
reliance on certain assumptions that it believes are reasonable at
this time, including assumptions as to the timing of the Spectra7
Shareholder meeting, the ability of the parties to the Purchase
Agreement to receive, in a timely manner and on satisfactory terms,
necessary approvals to complete the Sale Transaction, the ability
of such parties to satisfy, in a timely manner, the other
conditions to the closing of the Sale Transaction, and assumptions
related to the historical burn rate of Spectra7 and expenses
becoming due prior to Closing. Accordingly, readers should not
place undue reliance on the forward-looking statements and
information contained in this news release. Forward-looking
statements necessarily involve known and unknown risks and
uncertainties, many of which are beyond Spectra7's control. Such
risks and uncertainties include but are not limited to: the risk
that the Sale Transaction may not be completed on a timely basis,
or at all; risks that the conditions to the consummation of the
Sale Transaction may not be satisfied; the risk that the Sale
Transaction may involve unexpected costs, liabilities or delays;
the risk that, prior to the completion of the Sale Transaction,
Spectra7's business may experience significant disruptions,
including loss of customers or employees, due to
transaction-related uncertainty or other factors; the possible
occurrence of an event, change or other circumstance that could
result in termination of the Sale Transaction; risks that the Sale
Transaction may have a negative impact on the market price and
liquidity of the common shares of Spectra7; risks related to the
diversion of management's attention from the Trust's ongoing
business operations; risks relating to the failure to obtain
necessary Spectra7 Shareholder and TSXV approvals; risks related to
trade tariffs and retaliatory trade measures, specifically between
the United States and Canada; foreign exchange risk; the risk that
Spectra7's burn rate until Closing is much higher than anticipated,
or that there are unanticipated expenses that become due during
such time; and other risks inherent to completing a cross-border
transaction of this nature. Further, failure to obtain the
requisite approvals or the failure of the parties to otherwise
satisfy the conditions to or complete the Sale Transaction, may
result in the Sale Transaction not being completed on the proposed
terms, or at all. In addition, if the Sale Transaction is not
completed, and Spectra7's business continues in its current form,
the announcement of the Sale Transaction and the dedication of
substantial resources to the completion of the Sale Transaction
could have a material adverse impact on Spectra7's share price, its
current business relationships (including with future and
prospective employees, customers and partners) and on the current
and future operations, financial condition and prospects of
Spectra7.
When relying on forward-looking statements to make decisions,
investors and others should carefully consider the foregoing
factors and other uncertainties and potential events. Readers are
cautioned that the foregoing list of factors is not exhaustive.
Details of additional risk factors relating to Spectra7 and its
business, generally, are discussed under the heading "Business
Risks and Uncertainties" in the Spectra7's Management's Discussion
& Analysis for the year ended December
31, 2023, a copy of which is available on Spectra7's SEDAR+
profile at www.sedarplus.ca. These statements speak only as of the
date of this press release. Except as otherwise required by
applicable securities statutes or regulation, Spectra7 expressly
disclaims any intent or obligation to update publicly
forward-looking information, whether as a result of new
information, future events or otherwise.
Neither the TSXV nor its regulation services provider (as
that term is defined in the policies of the TSXV) accepts
responsibility for the adequacy or accuracy of this
release.
63663053.9
1 The US$/CDN$ exchange rate used throughout
this press release is CDN$1.437 to
US$1.00 based upon the Bank of
Canada exchange rate as at
March 5, 2025.
View original content to download
multimedia:https://www.prnewswire.com/news-releases/spectra7-microsystems-and-parade-technologies-ltd-enter-into-definitive-agreement-for-sale-of-substantially-all-of-spectra7s-assets-302395909.html
SOURCE Spectra7 Microsystems Inc.
