Funding at Risk if Audio Pixels Misses Product Tests or ASX Re-listing Deadline
Audio Pixels Holdings has locked in a $6 million unsecured loan facility from an investor linked to its chairman, with conversion to notes contingent on shareholder approval and company milestones.
- Unsecured $6 million loan facility from 4F Investments linked to Chairman Fred Bart
- Loan convertible into notes with options, subject to shareholder approval under ASX rules
- 12% interest rate, maturity set for January 2027, secured against intellectual property
- Funding continuation depends on product testing success and ASX re-listing within 120 days
- Conversion price floor at $3.50 per share with attaching options exercisable at $7.59
New Funding Injection
Audio Pixels Holdings Limited (ASX, AKP) has announced a significant funding development, securing an additional unsecured loan facility of up to $6 million from 4F Investments Pty Limited, a company associated with its chairman, Fred Bart. This facility is designed to be drawn progressively over the next twelve months, providing the company with much-needed working capital as it navigates critical operational milestones.
Convertible Notes and Shareholder Approval
The loan facility is structured with an option to convert into convertible notes accompanied by attaching options, but this conversion is conditional on shareholder approval under ASX Listing Rule 10.11. The convertible notes carry a 12% interest rate, capitalised until maturity or conversion, and mature on 30 April 2027. The conversion price is set at $9.04 per share but includes a floor price of $3.50 if the company undertakes a lower-priced share placement before conversion.
Additionally, for every $1 million converted, 4F Investments will receive 300,000 unlisted options exercisable at $7.59, expiring in May 2027. If the full $6 million is converted, this could result in the issuance of up to 1.7 million shares and 1.8 million options, potentially diluting existing shareholders but providing vital capital for the company.
Conditional Funding and Intellectual Property Security
The continuation of funding is contingent on two key conditions, the successful delivery of packaged chips meeting testing specifications and the company’s re-listing on the ASX within 120 days. Failure to meet either condition grants 4F Investments the option to cease funding, underscoring the risk profile of this arrangement.
Upon shareholder approval, the loan will be secured by a charge over Audio Pixels’ intellectual property assets, a move that reflects the strategic value of its patented digital loudspeaker technologies. This security interest aligns with ASX Listing Rule 10.1 requirements and provides some protection for the lender.
Strategic Implications
Audio Pixels, a pioneer in micro-electromechanical systems (MEMS) for digital sound generation, is at a pivotal stage. The new funding aims to bolster working capital as the company pushes towards product validation and market re-entry. However, the reliance on related-party funding and the conditional nature of the loan facility introduce complexities that investors will watch closely.
Shareholders will soon face decisions on approving the convertible notes and options, which will reshape the company’s capital structure. Meanwhile, the market will be keenly observing the company’s progress on product testing and its ASX re-listing efforts, both critical to unlocking this funding and future growth prospects.
Bottom Line?
Audio Pixels’ next moves on product validation and shareholder approval will be decisive for its financial trajectory and market confidence.
Questions in the middle?
- Will shareholders approve the conversion of the loan into convertible notes and options?
- Can Audio Pixels meet the product testing specifications and re-list on the ASX within the 120-day window?
- How will the potential dilution from convertible notes and options impact existing shareholders’ value?
