LeddarTech Enters Into Amendment to Credit Facility and Announces Receipt of Nasdaq Deficiency Notices

Rhea-AI Summary

LeddarTech Holdings Inc. (Nasdaq: LDTC), an automotive software company, has entered into an Eleventh Amending Agreement with Desjardins regarding its credit facility. The amendment temporarily reduces the required Minimum Cash Covenant and postpones interest payments until November 15, 2024, or earlier if certain conditions are met. The company is progressing discussions with shareholders and potential investors to secure financing, though success is not guaranteed.

Additionally, LeddarTech has received Nasdaq deficiency notices for failing to meet minimum bid price, market value of publicly held shares, and market value of listed securities requirements. The company has 180 days to regain compliance but cannot assure it will succeed or maintain other Nasdaq Global Market listing requirements.

Positive

• Desjardins agreed to temporarily reduce the Minimum Cash Covenant, providing short-term financial flexibility
• Interest payments for July to October 2024 are temporarily postponed, improving short-term cash flow
• The company is in discussions with shareholders and potential investors for financing

Negative

• LeddarTech failed to meet Nasdaq's minimum bid price of $1.00 per share
• The company did not meet Nasdaq's minimum market value of publicly held shares of $15 million
• LeddarTech failed to maintain Nasdaq's minimum market value of listed securities of $50 million
• There is no assurance that the company will secure the necessary financing
• Risk of delisting from Nasdaq if compliance is not regained within 180 days

Insights

Financial Analyst

LeddarTech's financial situation appears precarious. The company has negotiated reduced cash covenant requirements with Desjardins, dropping from C$5 million to as low as C$250,000 for a brief period. This suggests severe liquidity constraints. The postponement of interest payments and reduced monthly payments further indicate cash flow issues.

The company is actively seeking a financing transaction of at least US$35 million, which seems important for its near-term survival. However, there's no guarantee of success. The receipt of Nasdaq deficiency notices for failing to meet multiple listing requirements adds another layer of concern. These factors combined paint a picture of a company in financial distress, potentially facing delisting if it can't secure funding and improve its market performance rapidly.

Legal Expert

The amendment to LeddarTech's credit facility with Desjardins represents a significant alteration of loan terms, indicating the lender's willingness to work with the company through its financial difficulties. However, this also suggests increased risk for Desjardins.

The Nasdaq deficiency notices pose a serious threat to LeddarTech's listing status. Failure to meet the minimum bid price of US$1.00, MVPHS of US$15 million and MVLS of US$50 million within 180 days could result in delisting. This would have severe implications for the company's ability to raise capital and maintain investor confidence.

The potential unregistered securities offering mentioned in the financing transaction carries legal risks if not properly executed under exemptions from SEC registration requirements.

Market Research Analyst

LeddarTech's situation reflects broader challenges in the ADAS and autonomous driving software market. Despite the industry's potential, many companies are struggling with high R&D costs and extended commercialization timelines. The company's financial woes could indicate a mismatch between investor expectations and market realities.

The need for a US$35 million investment suggests that LeddarTech's cash burn rate may be unsustainable given current revenue streams. This is not uncommon in tech startups, but it highlights the risks of investing in early-stage automotive software companies.

If LeddarTech fails to secure funding or maintain its Nasdaq listing, it could have ripple effects on investor sentiment towards similar companies in the sector, potentially making it harder for other ADAS software firms to raise capital.

QUEBEC CITY, Canada, Aug. 06, 2024 (GLOBE NEWSWIRE) -- LeddarTech^® Holdings Inc. (“LeddarTech” or the “Company”) (Nasdaq: LDTC), an automotive software company that provides patented disruptive AI-based low-level sensor fusion and perception software technology, LeddarVision™, for ADAS, AD and parking applications, announces it entered into an Eleventh Amending Agreement (the “Amendment and Waiver”) with Fédération des caisses Desjardins du Québec (“Desjardins”) with respect to the Amended and Restated Financing Offer dated as of April 5, 2023 (as amended, the “Desjardins Credit Facility”).

As previously announced by the Company on July 5, 2024, pursuant to a Ninth Amending Agreement to the Desjardins Credit Facility, the Company was required to maintain an unencumbered cash balance (the “Minimum Cash Covenant”) of C$3.5 million from July 5, 2024 through July 6, 2024, and C$1.8 million from July 7, 2024 through July 26, 2024. Pursuant to a Tenth Amending Agreement to the Desjardins Credit Facility dated July 26, 2024, Desjardins had temporarily reduced the required Minimum Cash Covenant to C$1.3 million from July 26, 2024 through August 5, 2024, after which time the Company was to be obligated to maintain a minimum cash balance of C$5.0 million.

Pursuant to the Amendment and Waiver, among other things, Desjardins has agreed to:

• temporarily reduce the required Minimum Cash Covenant to (i) C$250,000 from August 6, 2024 through August 14, 2024, (ii) C$1,000,000 from August 15, 2024 until the earlier of the Short-Term Outside Date (as defined below) and November 15, 2024, and (iii) C$5,000,000 at all times after the earlier of the Short-Term Outside Date and November 15, 2024; and

• temporarily postpone payment of interest for the months of July, August, September and October 2024 until the earlier of (x) the date of disbursement of an equity investment in the Borrower for a minimum gross proceeds amount of US$35,000,000 (the “Short-Term Outside Date”) and (y) November 15, 2024.

The Amendment and Waiver provides for a monthly payment by the Company to Desjardins of C$125,000 until the Short-Term Outside Date, which payments will be due and payable on the earlier of the Short-Term Outside Date and November 15, 2024. The foregoing description of the Amendment and Waiver does not purport to be complete and is qualified in its entirety by reference to the Amendment and Waiver, a copy of which has been filed under the Company’s SEDAR+ and EDGAR profiles at www.sedarplus.ca and www.sec.gov, respectively.

The Company continues to progress its discussions with several of its principal shareholders and other potential investors to secure the financing described in the Company’s press release issued on July 5, 2024, which may include funding to meet near-term obligations while the Company continues to seek to close the larger financing (collectively, the “Financing Transaction”). There can be no assurance that such existing shareholders or other potential investors will invest any amount in the Financing Transaction, or that the Company will successfully complete the Financing Transaction at all.

Frantz Saintellemy, President and CEO of LeddarTech, said: “We are pleased to have the continued support of our partner and lender, Desjardins, as we continue to make solid progress on securing the funding we need to achieve our goals in both the short and long term. We look forward to providing an update when we release our third-quarter financial results on August 14.”

Any debt or equity securities to be offered and sold in the Financing Transaction may not be registered under the Securities Act of 1933, as amended, or State securities laws and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or an applicable exemption from such registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities in the Financing Transaction, nor shall there be any sale of such 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.

Receipt of Nasdaq Deficiency Notices

The Company also announces that it has received notices from the Listing Qualifications Department of the Nasdaq Stock Market LLC (collectively, the “Notices”) indicating that the Company did not comply with the following Nasdaq Listing Rules within certain time periods as required for continued listing on the Nasdaq Global Market: (i) minimum bid price of US$1.00 per share, (ii) minimum market value of publicly held shares (“MVPHS”) of US$15,000,000, and (iii) minimum market value of listed securities (“MVLS”) of US$50,000,000 (the “Listing Requirements”). The Notices also indicated that the Company will be afforded a period of 180 calendar days to regain compliance.

The Company intends to actively monitor the closing bid price, the MVPHS and the MVLS of its common shares and will evaluate available options to regain compliance with the Listing Requirements. However, there can be no assurance that the Company will be able to regain compliance with such Listing Requirements or maintain compliance with any of the other Nasdaq Global Market continued listing requirements.

The Notices have no immediate effect on the listing of the Company’s common shares, which will continue to be listed and traded on the Nasdaq Global Market under the symbol “LDTC,” subject to the Company’s compliance with the other continued listing requirements of the Nasdaq Global Market.

The foregoing also should be read in conjunction with the disclosures set forth in the Company’s Report of Foreign Private Issuer on Form 6-K as filed with the Securities and Exchange Commission and under the Company’s SEDAR+ profile on the date hereof, and the Company’s Annual Report on Form 20-F for the year ended September 30, 2023 as filed with the Securities and Exchange Commission and under the Company’s SEDAR+ profile on January 31, 2024, including the disclosures set forth under “Item 3.D – Key Information – Risk Factors” contained therein.

About LeddarTech

A global software company founded in 2007 and headquartered in Quebec City with additional R&D centers in Montreal and Tel Aviv, Israel, LeddarTech develops and provides comprehensive AI-based low-level sensor fusion and perception software solutions that enable the deployment of ADAS, autonomous driving (AD) and parking applications. LeddarTech’s automotive-grade software applies advanced AI and computer vision algorithms to generate accurate 3D models of the environment to achieve better decision making and safer navigation. This high-performance, scalable, cost-effective technology is available to OEMs and Tier 1-2 suppliers to efficiently implement automotive and off-road vehicle ADAS solutions.

LeddarTech is responsible for several remote-sensing innovations, with over 160 patent applications (87 granted) that enhance ADAS, AD and parking capabilities. Better awareness around the vehicle is critical in making global mobility safer, more efficient, sustainable and affordable: this is what drives LeddarTech to seek to become the most widely adopted sensor fusion and perception software solution.

Additional information about LeddarTech is accessible at www.LeddarTech.com and on LinkedIn, Twitter (X), Facebook and YouTube.

Contact:
Daniel Aitken, Vice-President, Global Marketing, Communications and Investor Relations, LeddarTech Holdings Inc. Tel.: + 1-418-653-9000 ext. 232 daniel.aitken@LeddarTech.com

• Investor relations website: investors.LeddarTech.com
• Investor relations contact: Kevin Hunt, ICR Inc. kevin.hunt@icrinc.com
• Financial media contact: Dan Brennan, ICR Inc. dan.brennan@icrinc.com
  

Leddar, LeddarTech, LeddarVision, LeddarSP, VAYADrive, VayaVision and related logos are trademarks or registered trademarks of LeddarTech Holdings Inc. and its subsidiaries. All other brands, product names and marks are or may be trademarks or registered trademarks used to identify products or services of their respective owners.

LeddarTech Holdings Inc. is a public company listed on the Nasdaq under the ticker symbol “LDTC.”

FAQ

What changes were made to LeddarTech's (LDTC) credit facility with Desjardins?

Desjardins agreed to temporarily reduce the Minimum Cash Covenant and postpone interest payments for July to October 2024 until November 15, 2024, or earlier if certain conditions are met.

What Nasdaq deficiency notices did LeddarTech (LDTC) receive?

LeddarTech received notices for failing to meet Nasdaq's minimum bid price of $1.00 per share, minimum market value of publicly held shares of $15 million, and minimum market value of listed securities of $50 million.

How long does LeddarTech (LDTC) have to regain compliance with Nasdaq listing requirements?

LeddarTech has been afforded a period of 180 calendar days to regain compliance with the Nasdaq listing requirements.

Is LeddarTech (LDTC) at risk of being delisted from Nasdaq?

Yes, LeddarTech is at risk of being delisted if it fails to regain compliance with Nasdaq listing requirements within the 180-day period or maintain compliance with other continued listing requirements.