News: Suppliers
12 February 2025
IQE raising £18m by issuing convertible loan notes
Epiwafer and substrate maker IQE plc of Cardiff, Wales, UK says that, further to its announcement of 18 November 2024, it has entered into subscription agreements with a consortium of existing investors and certain senior executives and directors, led by its largest shareholder Lombard Odier.
The noteholders have conditionally agreed to subscribe for, and IQE has conditionally agreed to issue, secured zero-coupon convertible loan notes with a conversion price of 15 pence per ordinary share pursuant to a convertible loan note instrument at 85% of the loan notes’ face value to raise total subscription proceeds of £18m. The initial term of the loan notes is 12 months, with an option to extend them for a further six months.
The convertible loan notes will be secured against IQE’s assets in the UK and subordinated to its existing financing facility with HSBC UK Bank plc, which will be amended and restated upon issuance of the loan notes. Following the completion of the proposed transaction, the directors do not expect to need to raise near-term capital.
No offer or invitation is being made to shareholders more generally to purchase, acquire or subscribe for any of the loan notes. No application will be made for the admission of the loan notes to trading on AIM or any recognised securities exchange.
General meeting
The issuance of the loan notes, and therefore the proposed transaction, is conditional, inter alia, on the passing of resolutions by shareholders at a general meeting of IQE on 10 March. IQE will soon send a circular and a notice convening the general meeting. The circular includes, inter alia, details of the convertible loan notes and the resolutions, which are being proposed (a) by way of ordinary resolution, to approve the directors' authority to allot ordinary shares with a total nominal value of up to £1,538,823.53, equal to 153,882,353 new ordinary shares, over which rights to subscribe are being granted by IQE pursuant to the issuance of the loan notes and, in the event that the conversion of the principal amount of the loan notes into new ordinary shares does not take place, warrants to subscribe for ordinary shares; and (b) by way of special resolution, to empower the directors to allot and issue equity securities for cash on a non-pre-emptive basis with an aggregate nominal value of up to £1,538,823.53, equal to 153,882,353 new ordinary shares, over which rights to subscribe are being granted by IQE pursuant to issuance of the loan notes and, in the event that conversion does not take place, the warrants.
As previously announced, IQE is undertaking a strategic review, which the directors believe will unlock significant unrealised value within the group. IQE says that the proposed transaction is integral to the strategic review and the firm’s ability to demonstrate financial resilience to both its customers and potential parties to the strategic review.
IQE remarks that, if the resolutions are not approved at the general meeting, the proposed transaction cannot complete and it will not receive the net proceeds from the issuance of the loan notes. The directors of IQE believe that successful completion of the transaction is required to maintain sufficient short-term liquidity while the firm completes the ongoing strategic review.
Noteholders who are currently holders of (or who control the exercise of voting rights attaching to) IQE's ordinary shares have each undertaken to vote their existing holdings of ordinary shares in favour of the resolutions.
Use of proceeds
Following the ongoing strategic review and significant strategic progress, IQE is undertaking the proposed transaction to provide additional short-term liquidity whilst it completes its strategic review. The proceeds from the transaction will be applied towards the firm’s short-term working capital requirements.
Lombard Odier nominee director
As previously announced on 17 May 2023 as part of a previous placing fundraising, Lombard Odier (as a substantial shareholder in IQE participating in such fundraising) was granted the right to nominate a non-executive director to IQE’s board as a representative of funds or accounts managed on a discretionary basis by Lombard Odier, subject to Lombard Odier continuing to exercise or control, directly or indirectly, 12% or more of IQE’s ordinary shares. In recognition of the significant additional investment by Lombard Odier pursuant to the proposed transaction, IQE has agreed to grant Lombard Odier the right to appoint an additional non-executive director for as long as funds or accounts managed by Lombard Odier continue to hold any loan notes.
“We are pleased a consortium led by our largest shareholder is providing this convertible loan note, which demonstrates continued support for IQE and belief in its long-term strategy and significant market opportunity,” comments IQE’s executive chair Mark Cubitt. “In parallel, IQE continues to make progress on its comprehensive strategic review of its asset base to ensure that it has a strong capital position to further invest in its core operations, with a particular focus on its Taiwan operations, for which all options are being assessed, including a full sale and IPO.”
IQE raises full-year 2024 revenue and adjusted EBITDA guidance
IQE’s flat revenue forecast for 2024 prompts strategic review
IQE to add 109 jobs and invest $305m expanding US operation in Greensboro
IQE appoints Mark Cubitt as non-executive director and chair-elect
