SCHMID Group N.V. announces a USD 20 million convertible notes financing

SCHMID a global leader in providing solutions to the high-tech industry mostly in electronics, announced today that it entered into an investment agreement with an institutional investor (the “Investor“) pursuant to which the Company will issue and sell senior convertible notes in an aggregate principal amount of $20.0 million convertible into ordinary shares of the Company (the “Notes”) in a private placement to the Investor (the “Investment Agreement”).

The Notes will be issued pursuant to an indenture issued at 99% of principal amount. The Notes bear interest at a rate of 5% per annum, compounded quarterly and payable in kind, subject to the Company’s right to elect cash payment upon prior notice. The Notes have a two-and-a-half-year maturity, i.e. they will mature on January 14, 2029, unless previously converted into shares of the Company.

The Notes are convertible, at the option of the Investor, into shares of the Company at the lower of USD 10.50 or the 97% of the applicable volume-weighted average price of the shares of the Company, subject to a minimum conversion price of USD 1.93 per share and certain daily conversion limits as further specified in the Investment Agreement.

In connection with the execution of the Investment Agreement, the Company will also enter into a registration rights agreement with the Investor pursuant to which the Company agrees to file a registration statement covering the resale of the shares issuable upon conversion of the Notes.

The Company’s obligations under the Notes are guaranteed by its German operating subsidiary, Gebr. Schmid GmbH, subject to applicable German law limitations. The Investment Agreement and the provisions of the Notes contain customary affirmative and negative covenants, change of control protections and events of default customary for transactions of this type.

The net proceeds from the issuance of the Notes will be used to fund the working capital need resulting from the ongoing order intake acceleration and growth capital needed for the move from rented to owned manufacturing plant in China with nearly double capacity.

“Since the beginning of this year, we have replenished working capital, converted the majority of the shareholder-related debt to equity cleaning-up the balance sheet to an appropriate level. As order intake is accelerating, we want to be in a position of strength and have the flexibility to take growth opportunities as they come” said Arthur Schuetz, Chief Financial Officer of the Company.

William Blair acted as sole placement agent in connection with the financing.

The securities described above have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state’s securities laws, and are being issued and sold pursuant to an exemption from registration provided for under the Securities Act. Accordingly, these securities may not be offered or sold in the United States, except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act. The Company has agreed to file a registration statement with the U.S. Securities and Exchange Commission registering the resale of the ordinary shares issuable upon conversion of the Notes. Any offering of the securities under the resale registration statement will only be made by means of a prospectus.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction.