Traffic Technologies Ltd - Debt Refinancing and Share Placement Announcement
TTI (TTI) Share Update August 2024 Tuesday 27th
Traffic Technologies Ltd Announces Refinancing of Debt Facilities
Traffic Technologies Ltd (ASX: TTI) has announced a significant refinancing of its debt facilities, including a new share placement to bolster its working capital.
Instant Summary:
- Traffic Technologies Ltd enters a 3-year convertible note agreement for US$3m.
- Season Group takes a share placement in TTI worth A$904,783.
- First Samuel Ltd replaces TTI's existing $2m term loan with new financing agreements.
- Convertible note conversion terms set at a discount to market value.
- Extraordinary General Meeting to be called for shareholder approval.
Refinancing and Share Placement Details
Traffic Technologies Ltd (ACN 080 415 407) (ASX: TTI) has entered into binding agreements to refinance its existing debt facilities. This refinancing includes a 3-year convertible note agreement worth US$3 million (approximately AUD $4.5 million) and a manufacturing service agreement with the Hong Kong-based electronic manufacturing services provider, Season Group.
As part of the agreement, Season Group will take a share placement in Traffic Technologies Ltd worth A$904,783 through the issue of approximately 146 million shares at A$0.0062 (0.62 cents) per share. Additionally, TTI has entered into a 3-year convertible note agreement for A$1 million, a A$0.5 million equity conversion, and a A$0.5 million debt facility with First Samuel Ltd to replace its existing $2 million term loan.
Convertible Note Conversion Terms
The convertible note conversion for both Season Group and First Samuel will be at the lower of A$0.0085 (0.85 cents) per share or the price calculated by applying a 20% discount to the 30-day volume-weighted average price (VWAP) of the shares as at the last trading day immediately before the maturity date.
Strategic Partnership with Season Group
Season Group, a Hong Kong-based IoT technology solutions provider and manufacturer, operates globally with manufacturing facilities in China, Malaysia, Mexico, and engineering teams in Hong Kong, China, Eindhoven, and Toronto. Traffic Technologies Ltd aims to leverage Season Group's expertise to broaden its product roadmap and meet global customer demand.
Management Comments
Con Liosatos, Managing Director of Traffic Technologies Ltd, expressed enthusiasm about the new facility agreements with Season Group and the ongoing partnership with First Samuel. He stated, 'The new facilities with Season Group, along with the manufacturing capabilities in electronic and IoT products and systems, will provide Traffic Technologies with the necessary liquidity on better terms to meet our ongoing working capital requirements and the balance sheet strength to pursue the next stage of the Company’s growth in IoT – which is particularly beneficial following a number of significant recent contract wins.'
Carl Hung, President and CEO of Season Group, commented, 'Both Season Group and Traffic Technologies are committed to developing products that enhance our living standards. Our confidence in Traffic Technologies’ capabilities is exemplified by our investment of working capital, and design and manufacturing support. We foresee significant growth and value delivered to its shareholders.'
Extraordinary General Meeting
Traffic Technologies Ltd will call an Extraordinary General Meeting of shareholders to seek the necessary approvals to give effect to the refinancing agreements.
The refinancing of debt facilities and the new share placement are expected to provide Traffic Technologies Ltd with improved liquidity and financial stability. This strategic move could strengthen the company's balance sheet and support its growth initiatives in the IoT sector. The involvement of Season Group, a reputable technology solutions provider, may also enhance investor confidence in TTI's future prospects.
Investor Reaction:
Analysts are likely to view the refinancing and share placement positively, as it addresses the company's immediate liquidity needs and positions it for future growth. The strategic partnership with Season Group could be seen as a vote of confidence in TTI's capabilities and potential. However, some investors may be cautious about the dilution effect of the new share issuance.
Conclusion:
Investors should closely monitor the developments related to Traffic Technologies Ltd's refinancing and share placement. The upcoming Extraordinary General Meeting will be a critical event to watch, as shareholder approval is necessary to finalize the agreements. This strategic move could significantly impact TTI's financial health and growth trajectory in the coming years.