Genasys Announces $15 Million Two-Year Term Loan Agreement
Genasys (NASDAQ: GNSS) announced a $15 million two-year senior secured term loan with an institutional investor specializing in government contracts. Proceeds will support working capital, general corporate purposes, and a project in Puerto Rico. The loan is secured by the company's assets and has a 2% original issue discount. Interest is payable quarterly at the three-month SOFR plus 5%, with an option to pay partly in shares at a higher rate. The loan, due May 13, 2026, is prepayable at 101% of par in the first year and par thereafter. Genasys also issued approximately 3.1 million five-year warrants at $2.53 per share. ROTH Capital Partners was the placement agent for this transaction.
- Raised $15 million in new financing.
- Funds will support working capital and corporate growth.
- Enables execution of a significant project in Puerto Rico.
- Loan is non-amortizing, easing short-term cash flow pressures.
- Option to prepay principal at favorable rates.
- Loan secured by substantially all company assets, increasing risk.
- Quarterly interest payments add financial obligations.
- Issuing warrants may dilute existing shareholder equity.
- Interest partly payable in shares could lead to further dilution.
Insights
Genasys securing a
Importantly, the loan is secured by substantially all of Genasys' assets, highlighting the risk should the company face financial difficulties. The option to prepay principal at 101% of par in the first year and at par thereafter offers some flexibility but should be weighed against the penalties for early repayment. Additionally, the issuance of 3.1 million five-year warrants at a price of $2.53 could lead to future dilution of shares, affecting current shareholders.
The loan agreement's terms contain several critical elements that investors should notice. The loan's security over substantially all of Genasys' assets implies that the lender has significant control in the event of a default. This arrangement might make the company more cautious with its asset management strategies.
The inclusion of 3.1 million warrants, each exchangeable at $2.53, introduces potential dilution risks. If these warrants are exercised, the resulting increase in shares could dilute the value of existing shares, although it does provide a future influx of capital. The prepayment clause at 101% of par in the first year offers Genasys some leeway. Still, the stipulation points to the necessity of careful financial planning to avoid penalties.
SAN DIEGO, May 14, 2024 (GLOBE NEWSWIRE) -- Genasys Inc. (NASDAQ: GNSS), the global leader in protective communications, today announced the close of a
The loan is secured by substantially all of the Company’s assets and was issued with a
ROTH Capital Partners acted as Placement Agent and legal representation was provided by Dentons Durham Jones Pinegar P.C.
About Genasys Inc.
Genasys Inc. (NASDAQ: GNSS) is the global leader in Protective Communications Solutions and Systems, designed around one premise: ensuring organizations and public safety agencies are “Ready when it matters™.” The company provides the Genasys Protect platform, the most comprehensive portfolio of preparedness, response, and analytics software and systems, as well as Genasys Long Range Acoustic Devices (LRAD®) that deliver directed, audible voice messages with intelligible vocal clarity from close range to 5,500 meters. Genasys serves state and local governmental agencies, and education (SLED); enterprise organizations in critical sectors such as oil and gas, utilities, manufacturing, and automotive; and federal governments and the military. Genasys Protective Communications Solutions have diverse applications, including emergency warning and mass notification for public safety, critical event management for enterprise companies, de-escalation for defense and law enforcement, and automated detection of real-time threats like active shooters and severe weather. Protecting people and saving lives for over 40 years, Genasys covers more than 70 Million people in over 100 countries worldwide, including more than 500 U.S. cities, counties and states. For more information, visit genasys.com.
Forward-Looking Statements
Except for historical information contained herein, the matters discussed are forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. You should not place undue reliance on these statements. We base these statements on particular assumptions that we have made in light of our industry experience, the stage of product and market development as well as our perception of historical trends, current market conditions, current economic data, expected future developments and other factors that we believe are appropriate under the circumstances. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those suggested in any forward-looking statement. The risks and uncertainties in these forward-looking statements include without limitation the business impact of geopolitical conflicts, epidemics or pandemics, and other causes that may affect our supply chain, and other risks and uncertainties, many of which involve factors or circumstances that are beyond the Company’s control. Risks and uncertainties are identified and discussed in our filings with the Securities and Exchange Commission. These forward-looking statements are based on information and management’s expectations as of the date hereof. Future results may differ materially from our current expectations. For more information regarding other potential risks and uncertainties, see the “Risk Factors” section of the Company’s Form 10-K for the fiscal year ended September 30, 2023. Genasys Inc. disclaims any intent or obligation to publicly update or revise forward-looking statements, except as otherwise specifically stated.
FAQ
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