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Pixie Dust Technologies Announces Debt Financing

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Pixie Dust Technologies (Nasdaq: PXDT) has announced new debt financing from The Shoko Chukin Bank, amounting to one billion yen. The funds, intended for working capital, were secured on May 31, 2024, with a maturity date of September 30, 2025. The loan will be repaid in a lump sum on maturity, with an interest rate comprising the lender's short-term prime rate plus a spread of 2.525% per annum. The company anticipates additional debt financing from other Japanese financial institutions and will update stockholders accordingly.

Positive
  • Secured a significant loan of one billion yen, boosting working capital.
  • Interest and repayment terms are clearly defined, aiding financial planning.
  • Potential for additional financing from other institutions, indicating strong lender confidence.
Negative
  • High-interest rate (base rate plus 2.525%) increases financial burden.
  • Debt repayment in a lump sum could stress future liquidity.
  • Increased debt levels may concern shareholders regarding financial stability.

Insights

Pixie Dust Technologies has announced a new debt financing agreement of 1 billion yen with The Shoko Chukin Bank. This move indicates the company's need for working capital, which could suggest liquidity issues or expansion plans.

The interest rate structure includes a 2.525% spread over the lender's short-term prime interest rate. Given the current low interest rate environment in Japan, this rate could be considered relatively high, indicating the lender's perception of risk.

While the lump-sum repayment method on the maturity date of September 30, 2025 provides some flexibility in the short term, it may pose a significant financial burden when the debt matures. Retail investors should consider this potential risk, especially if the company's revenue growth does not meet expectations.

Additionally, the company's intent to seek further debt financing from other institutions suggests ongoing capital needs, which may impact its leverage ratios and financial stability in the long run.

From a market perspective, Pixie Dust Technologies' decision to secure debt financing can be seen as a strategy to support its R&D and commercialization efforts. This aligns with their business model of developing innovative products using proprietary wave control technology.

However, investors should be cautious about the company's dependency on debt, which could affect its credit rating and future financing costs. The market might react modestly unless the funds lead to significant product advancements or market share gains.

Furthermore, the technology sector is highly competitive and the ability to innovate continually will be critical. If the company can leverage this capital effectively to drive growth and capture market opportunities, it could offset the increased financial risk.

NEW YORK and TOKYO, May 31, 2024 /PRNewswire/ - Pixie Dust Technologies, Inc. (Nasdaq: PXDT) (the "Company"), a Japanese technology company focused on commercializing innovative products and materials utilizing proprietary wave control technology, today announced its new debt financing.

New debt financing

On May 31, 2024, Pixie Dust Technologies, Inc. (the "Company") reached an agreement with The Shoko Chukin Bank, Ltd. (the "Lender") to obtain new debt financing (the "New Debt") in the amount of one billion yen.

Below is an outline of terms and conditions of New Debt.

Loan Amount

1,000,000,000 yen

Use of funds

Working capital

Borrowing Date

May 31, 2024

Maturity Date

September 30, 2025

Principal Repayment Method

Pay in a lump sum on the Maturity Date

Base Rate

The lender's short term prime interest rate on each interest payment date

Spread

2.525% per annum

Applicable Interest Rate

Interest rate calculated by adding a spread to the base interest rate


The Company also expects to obtain additional debt financing from other financial institutions in Japan. Once the Company has reached any agreements with such financial institutions, the Company will provide additional information to its stockholders as part of its ongoing public company reporting obligations.

Forward-Looking Statements

Certain statements contained in this press release are "forward-looking statements" made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect the Company's current expectations or beliefs concerning future events and actual events may differ materially from current expectations. Words such as "expect," "anticipate," "should," "believe," "hope," "target," "project," "aim," "objective," "goal," "estimate," "potential," "predict," "may," "will," "might," "could," "intend," variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Any such forward-looking statements are subject to various risks and uncertainties, many of which involve factors or circumstances that are beyond the Company's control, including but not limited to the strength of the economy, changes to the market for securities, the effects of inflation and its associated impact on prevailing interest rates, political or financial instability, and other factors which are set forth in the Company's prospectus that forms a part of the Registration Statement on Form F-1 (File No. 333-272476), as amended, and in all filings with the SEC made by the Company subsequent to the filing thereof (including, without limitation, the Company's most recent annual report filed under cover of Form 20-F). The forward-looking statements included in this press release represent the Company's views as of the date of this press release. The Company anticipates that subsequent events and developments will cause its views to change. These forward-looking statements should not be relied upon as representing the Company's views as of any date subsequent to the date of this press release. The Company does not undertake to publicly update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.

About Pixie Dust Technologies, Inc.

Pixie Dust Technologies, Inc. is a Japanese technology company focused on commercializing innovative products and materials utilizing proprietary wave technology. The Company is currently focusing on two areas of product development: (1) "Personal Care & Diversity", where wave control technology is applied to mechanobiology and intervention/assistance in vision, hearing, and touch, and (2) "Workspace & Digital Transformation," where metamaterials (technology that creates properties through structure rather than material) and solutions to commercial design problems, such as in offices or construction sites, are applied.

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SOURCE Pixie Dust Technologies

FAQ

What is the amount of new debt financing secured by Pixie Dust Technologies?

Pixie Dust Technologies secured one billion yen in new debt financing.

What is the interest rate for the new debt financing for PXDT?

The interest rate is the lender's short-term prime rate plus a spread of 2.525% per annum.

When is the maturity date for Pixie Dust Technologies' new debt?

The maturity date for the new debt is September 30, 2025.

What is the principal repayment method for PXDT's new debt?

The principal will be repaid in a lump sum on the maturity date.

What is the purpose of the new debt financing for Pixie Dust Technologies?

The funds are intended to be used for working capital.

Which bank provided the new debt financing to PXDT?

The Shoko Chukin Bank, provided the new debt financing.

Is Pixie Dust Technologies planning to secure additional debt financing?

Yes, the company expects to obtain additional debt financing from other financial institutions in Japan.

Pixie Dust Technologies, Inc. American Depositary Shares

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