Mynaric Increases USD 75 million Borrowing Capacity on Loan Agreement by USD 20 million

Rhea-AI Summary

Mynaric AG (NASDAQ: MYNA) amends its US$75 million loan agreement with US-based lenders to increase borrowing capacity by US$20 million. The amendment includes a delayed draw facility with similar terms and conditions, available until September 2025. The additional liquidity aims to support working capital needs and general corporate purposes.

Insights

Financial Analyst

The decision by Mynaric AG to amend its loan agreement and increase its borrowing capacity by US$20 million through a delayed draw facility is a strategic financial move that could signal to investors the company's proactive management of its capital structure. The availability of additional funds until September 2025 provides Mynaric with greater financial flexibility to meet its working capital requirements and support general corporate purposes. This could be indicative of the company's growth ambitions or a need to finance ongoing operations amidst cash flow challenges.

The use of a delayed draw facility allows the company to access funds as needed, which can be more efficient than raising capital through equity issuance, as it avoids immediate dilution of existing shareholders. However, the interest rate terms, which include a margin of 10% or 9% over the SOFR, suggest a high cost of capital, which could impact the company's long-term debt servicing ability. The option to pay up to 300 basis points of interest in kind by increasing the principal amount further adds to the potential future debt burden.

Investors should be aware of the implications of the security interest in substantially all of the assets of the borrower and each of the guarantors. This could limit the company's ability to leverage these assets for future financings or put them at risk in case of default. The critical consideration here is the balance between the immediate liquidity benefits against the long-term financial health of the company.

Market Research Analyst

Mynaric AG operates in the aerospace and defense industry, specifically focusing on laser communication technologies, which is a highly specialized and capital-intensive sector. The decision to increase borrowing capacity may be driven by the need to invest in research and development or to scale up production to meet demand. The market for laser communication is expected to grow, fueled by the increasing demand for high-speed communication and the deployment of satellite constellations.

From a market perspective, the amendment of the loan agreement could be seen as a positive development, as it provides the company with the necessary resources to capture market opportunities and maintain a competitive edge. However, it is also essential to monitor the company's financial metrics and performance closely, as the high-interest rate and potential increase in debt levels could affect its profitability and valuation in the long run.

Understanding the competitive landscape and the company's position within it will be crucial. If Mynaric can leverage the additional capital to secure a stronger market position, the short-term financial burden may be justified. However, if the industry faces headwinds or the company cannot effectively convert the capital into profitable growth, the increased debt could become a significant concern for stakeholders.

Legal Expert

The legal considerations surrounding the amendment to Mynaric AG's loan agreement are multifaceted. The provision of a security interest in substantially all of the assets of the borrower and guarantors is a common practice in secured lending, but it does raise questions about the company's risk exposure. Stakeholders should consider the legal ramifications of such a security interest, including the potential for asset seizure in the event of default.

Additionally, the terms of the delayed draw facility, which are substantially similar to the existing term loan facility, indicate a continuity of legal obligations and protections for both the lender and borrower. The presence of customary drawdown conditions and the original issue discount are standard features in such agreements, but they also require careful scrutiny to ensure that the company's interests are adequately safeguarded.

It is important to consider the broader legal context, including any regulatory changes that might affect the cost or availability of capital. While the legal specifics of the agreement are a critical piece of the puzzle, they should be viewed in conjunction with the company's financial strategy and market position to fully understand the potential impact on Mynaric AG's business operations.

MUNICH, GERMANY / ACCESSWIRE / March 14, 2024 / Mynaric AG (NASDAQ:MYNA; ISIN: US62857X1019)(FRA:M0YN; ISIN: DE000A31C305) (the "Company") today decided on an amendment to its existing US$75 million loan agreement with its US-based lenders, which are funds affiliated with a U.S.-based global investment management firm (the "Lenders"), to increase the borrowing capacity on the loan agreement by US$20 million utilizing a delayed draw facility provided on substantially the same terms and conditions as the existing term loan facility. As is the case for the existing term loan facility, the borrower under the delayed draw facility will be the Company's wholly-owned subsidiary, Mynaric USA Inc.

The US$20 million delayed draw facility is available until September 2025 and, as is the case for the existing term loan facility, loans drawn thereunder will be guaranteed by the Company and each of its subsidiaries, and will be secured by a security interest in substantially all of the assets of the borrower and each of the guarantors. Loans under the delayed draw facility will bear interest at the same rate as is applicable to loans under the existing term loan facility, namely a rate equal to the Term Secured Overnight Financing Rate (SOFR) for a 3-month tenor or, at the option of the borrower, a certain alternative base rate (subject, in each case, to a 2% floor), plus a margin of 10% or 9%, respectively, and just as is the case for the existing term facility, up to 300 basis points of interest payable on or prior to the first interest payment date occurring on or after April 25, 2025 may be paid in kind by increasing the principal amount of the loans.

The additional liquidity under the amended loan agreement that is expected to become effective today will be fully available thereafter (subject to satisfaction of customary drawdown conditions at the time of any draw, including payment of a 2% original issue discount at the time of any such draw) and is expected to be drawn down as needed to support the Company's working capital requirements and other general corporate purposes.

About Mynaric

Mynaric (NASDAQ: MYNA) (FRA: M0YN) is leading the industrial revolution of laser communications by producing optical communications terminals for air, space and mobile applications. Laser communication networks provide connectivity from the sky, allowing for ultra-high data rates and secure, long-distance data transmission between moving objects for wireless terrestrial, mobility, airborne- and space-based applications. The company is headquartered in Munich, Germany, with additional locations in Los Angeles, California, and Washington, D.C. For more information, visit mynaric.com.

Forward-Looking Statement

This release includes forward-looking statements. All statements other than statements of historical or current facts contained in this release, including statements regarding our future results of operations and financial position, industry dynamics, business strategy and plans and our objectives for future operations, are forward-looking statements. These statements represent our opinions, expectations, assumptions, beliefs, intentions, estimates or strategies regarding the future, which may not be realized. Forward looking statements are often indicated by terms such as "anticipate," "believe," "could," "estimate," "expect," "forecast," "goal," "intend," "look forward to," "may," "plan," "potential," "predict," "project," "should," "target" "will," "would" and/or the negative of these terms or other similar expressions that are intended to identify forward-looking statements.

The forward-looking statements included in this release are based largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements involve known and unknown risks, uncertainties and assumptions that are difficult to predict or are beyond our control, and actual results may differ materially from those expected or implied as forward-looking statements. These risks, uncertainties and assumptions include, but are not limited to (i) the impact of any geopolitical tensions or the global COVID-19 pandemic on the global economy, our industry and markets as well as our business, (ii) risks related to our limited operating history, our history of significant losses and the execution of our business strategy, (iii) risks related to our ability to successfully manufacture and deploy our products and risks related to serial production of our products, (iv) risks related to our sales cycle which can be long and complicated, (v) risks related to our limited experience with order processing, our dependency on third-party suppliers and external procurement risks, (vi) risks related to defects or performance problems in our products, (vii) effects of competition and the development of the market for laser communication technology in general, (viii) risks related to our ability to manage future growth effectively and to obtain sufficient financing for the operations and ongoing growth of our business, (ix) risks relating to the uncertainty of the projected financial information, (x) risks related to our ability to adequately protect our intellectual property and proprietary rights and (xi) changes in regulatory requirements, governmental incentives and market developments. Moreover, new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this release may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. We caution you therefore against relying on these forward-looking statements, and we qualify all of our forward-looking statements by these cautionary statements.

The forward-looking statements included in this release are made only as of the date hereof. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. Unless required under applicable law, neither we nor any other person undertakes any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release or otherwise. You should read this release with the understanding that our actual future results, levels of activity, performance and events and circumstances may materially differ from what we expect.

This release may include certain financial measures not presented in accordance with IFRS. Such financial measures are not measures of financial performance in accordance with IFRS and may exclude items that are significant in understanding and assessing our financial results. Therefore, these measures should not be considered in isolation or as an alternative to loss for the period or other measures of profitability, liquidity or performance under IFRS. You should be aware that our presentation of these measures may not be comparable to similarly titled measures used by other companies, which may be defined and calculated differently.

Contact:

Mynaric AG
+49 8105 7999 0
comms@mynaric.com
www.mynaric.com

SOURCE: Mynaric AG

View the original press release on accesswire.com

FAQ

What is the ticker symbol for Mynaric AG?

The ticker symbol for Mynaric AG is MYNA.

What was the amendment made by Mynaric AG to its loan agreement?

Mynaric AG decided to increase its borrowing capacity by US$20 million through a delayed draw facility on similar terms and conditions as the existing term loan facility.

Until when is the US$20 million delayed draw facility available?

The US$20 million delayed draw facility is available until September 2025.

What are the purposes of the additional liquidity from the amended loan agreement?

The additional liquidity is expected to support the Company's working capital requirements and other general corporate purposes.