Audio Pixels Holdings has raised A$1 million through convertible notes and extended existing loan maturities, bolstering its working capital runway as it advances its digital audio technology ambitions.
- Issued A$1 million in unsecured convertible notes to three sophisticated investors
- Convertible notes carry 12% interest and mature on 30 April 2027
- Conversion price set at A$9.04, adjustable with a floor of A$3.50 per share
- 300,000 unlisted options to be issued pending shareholder approval
- Extended maturity of existing unsecured loans to 30 April 2027
Strategic Funding Boost
Audio Pixels Holdings Limited (ASX: AKP), a leader in digital loudspeaker technology, has announced a fresh injection of capital through the issuance of A$1 million in convertible notes to three sophisticated investors. This move is designed to extend the company’s working capital runway and support its near-term strategic objectives.
The convertible notes are unsecured, carry an attractive 12% annual interest rate capitalised until repayment or conversion, and mature on 30 April 2027. The conversion price is set at A$9.04 per share but includes provisions for adjustment if the company undertakes share placements at lower prices, with a conversion floor of A$3.50 per share. This structure offers investors a balance of fixed income and potential equity upside.
Options and Shareholder Approval
In addition to the convertible notes, investors will receive 300,000 unlisted options, exercisable at A$7.59 and expiring on 5 May 2027. These options are subject to shareholder approval at the company’s next meeting, underscoring the importance of governance in the company’s capital management strategy.
Notably, the investors are independent parties, with no ties to the company’s management, substantial shareholders, or advisors, which may reassure the market about the impartiality of this funding round.
Loan Maturity Extensions Signal Confidence
Complementing the new convertible notes, 4F Investments Pty Ltd, controlled by Audio Pixels’ Chairman Fred Bart, has agreed to extend the maturity date of its unsecured loan facility to 30 April 2027, maintaining the same 12% interest terms. Furthermore, holders of previously issued convertible notes totaling A$13.75 million have also agreed to extend their maturity dates to align with this timeline.
This coordinated extension of debt maturities suggests a collective confidence among key stakeholders in Audio Pixels’ strategic direction and long-term prospects.
Implications for Shareholders and Market
The new funding and loan extensions come within the company’s 15% placement capacity under ASX Listing Rule 7.1, avoiding the need for immediate shareholder approval for the convertible notes issuance. However, the options issuance will require shareholder consent, which will be a key event to watch.
While the convertible notes provide much-needed liquidity, the potential dilution from conversion at a discounted price introduces an element of uncertainty for existing shareholders. The company’s ability to execute its strategic plans effectively will be critical in justifying this capital structure and delivering shareholder value.
Bottom Line?
Audio Pixels’ latest funding moves extend its runway but set the stage for potential dilution ahead.
Questions in the middle?
- Will shareholder approval for the unlisted options be secured at the upcoming meeting?
- How might future share placements at lower prices impact the conversion price and dilution?
- What specific milestones does Audio Pixels aim to achieve with this extended funding?