BRN (ASX) Ann: Capital Call with LDA

Originally posted by Doz: ↑

Hi Stan , below is an email extract from the company , note plan A was to complete the agreement by completing the 9.2M draw down by the 22nd . However there was a plan B possibility , being to negotiate an extension . At this point we have not been informed how much the 9.2M was reduced via the call to sell the 8,750,000 shares that were already being held by LDA . I suspect PVDM took a bullet on behalf of all shareholders by agreeing to pay some $420,000 in fees to LDA to maybe secure the extension and satisfy all parties , however that is just my theory . I am currently attempting to arrange a viewing of the register via Boardroom to gather some facts , so just hold on and we can continue this conversation based upon the factual numbers .

Email extract :

Last year upon completion of the first capital call, we fulfilled our obligations under the original POA. After the first capital call closed in October of 2020, LDA offered to increase the available funding to A$45M and extend the agreement for another year without any additional feeds or options if we agreed to commit to an additional A$10M which we did. The date of that extension was22 October(see ASX Release dated26 Oct). As you noted below, we must draw down a total of $9.2M by22 Octoberto fulfil our obligation so we will need to do one more drawdown or negotiate an extension to the agreement. As of today, we intend to carry through with the original plan.

All in my opinion ……

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Many Thanks Dolci and Doz
Very helpful explanation which helped me to understand better.

It looked back the first Financing Ann back in 13/08/2020

Now the 1st capital call was for 8,750,000. looking at the broker data record, LDA seems to have sold exactly 8,750,000 shares on market + the fund need to pay the first commitment fee. From the screenshot below you can see between 16/08/2021 and 31/08/2021, there are 9 lots of 875,000 + 1 lot of 1,380,000. it looks like on 25/08/2021 LDA sold 875,000+505,000. therefore makes it roughly 10 lots of 875,000 (exactly the total amount of the capital call) + the commitment fee to complete this 1st capital call.

So the number in broker report makes sense now

now the amendment to finance instrument announcement issued on 26/10/2020 statement that:

This confirms that
1, $9.2m drawn down required by 22/10/2021 is the last drawn down Brainchip is obliged to do if the company believe it has enough funding for now.

2, about half of this $9.2m drawn down has already been done by 31/08/2021.

According to Doz's Email extract, "As you noted below, we must draw down a total of $9.2M by 22 October to fulfil our obligation so we will need to do one more drawdown or negotiate an extension to the agreement. As of today, we intend to carry through with the original plan." Looks like it is very likely that:
1, the company will announce another capital call notice by 22/10/2021, and it seems LDA are not planning to extend the minimum draw down as it has already started selling again on 05/10/2021 (1 million share sold by FinClear on 5/10/2021)

2, Conservatively assume the average sold price will be 40c, the remaining possible selling by LDA between 06/10/2021 and 22/10/2021 is roughly no more than ($9.2m - $4.8m) / 0.4= 11 million shares

Please correct me if my calculation is not right. But my calculation is roughly correct, then in the 13 trading days between 06/10/2021 and 22/10/2021, on average about 900k share will be sold by LDA on market everyday.

If that is the case, then I think if without an price sensitive annoucement, selling from LDA will still have a modest impact in share price in the next 2 weeks. However, after that I guess our party should start as we getting close toward update on chip test and shipment by end of Q4.

By the way, Bridges (ex CEO, Louis) has stopped selling since 30/09/2021, and for the first time in a long period, Bridges bought 839,000 share without selling any on 05/10/2021. Is it because Louis started buying back some shares? I guess we will find out in the next few updates

Bridges bought in total only 1.4m share between 17/03/2021 and 04/10/2021

Originally posted by dolci: ↑

"So take this portion out of the total sum, it is clear that LDA sold 10,255,000 shares so far until 05/10/2021, the total sell value was $4,885,898.46."

LDA still has some to sell roughly 5M + by 22 October, my guess is that they will abandon that as it is up to the Co when to put a call on those options, my suggestion is that they need to renegotiate that part of the contract to a later date as they don't need the funds, they are getting 10M from the conversion of Lou's options to shares...

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