Investors have for some time hoped for a solution for the cash problems of CybAero. This week the company announced a letter of intent securing the company sufficient funds to continue. At the same time, the company received a fine for misleading market communications. No wonder we saw huge changes in the share price.
First the positive news on funds. CybAero and Bracknor signed a letter of intent in which Bracknor agrees to lend CybAero money and after 12 months converting the loans into shares. In total, Bracknor will loan CybAero $ 5.25 million. The loans comes as seven different loans. This probably to secure Bracknor an exit if the company does not progress sufficiently or does not need all the money. Along the loans is a package of warrants allowing Bracknor to subscribe for additional 30 % of each loan. The conversion rate, that is the price for the shares, is 88-90% of the trading price 15 days before the conversion. For the warrants, it is 125 % of the price.
Along the money from Bracknor another large investor, Subversive Capital has agreed to subscribe for 10% of Bracknor’s subscriptions.
Despite all the technicalities of the agreement, the bottom line is that this is a massive private placement. It places the future ownership of CybAero mainly at Bracknor but also enlarging Subversive Capitals involvement as well. The market cap today is 60 MSEK and Bracknor will provide loans worth 43.6 MSEK. My guess is that Bracknor will hold at least 30% of the company when or if all loans are converted.
…and fines for CybAero
CybAero also was fined this week, receiving a fine of SEK 341,890 for misleading market communication. At least the now have money to pay the fine after the agreement with Bracknor.
Nasdaq fined CybAero for their communication regarding the orders from AVIC, the Chinese Customs, and their rather late communication of a denial of an export permit form ISP. All these topics you can find in more details in various posts on CybAero on this blog. They also stated that the company have not had the necessary organisation to handle a correct market communication. Read the decision in full from the Nasdaq Disciplinary Committee.
Hopefully, this is a new start for CybAero and hopefully the company can win orders from other countries than China.