Etherstack investor LHC Capital exercises convertible note option in the wake of 1,358pc surge

Tech

July 2, 2020 | Sam Jacobs

SHARE

• 
• 
• 
• 

Wireless technology company Etherstack (ASX:ESK) had a financing update for the market this afternoon, following yesterdays’ meteoric rise.

Shares ripped higher following news of a deal with Samsung, which will see the electronics giant integrate Etherstack’s digital LMR (Land Mobile Radio) “soft-switching” technologies into its network offering.

The company followed up with a clarification on revenue, which it said would be derived “when Samsung and Etherstack together supply technology to Samsung’s customers”.

After climbing by around 300 per cent in morning trade on Tuesday, it finished the day with a gain of 1,358.33 per cent.

The rally took place on a trading volume of almost 22 million, up from 95,000 on Monday. Having avoided an ASX price query or trading halt, the stock jumped by another 100 per cent this morning before giving back those gains to trade flat in the afternoon session.

Conversion

Shortly after 1pm AEST today, Etherstack announced it would be undertaking a partial conversion of a $2m convertible note issued last August. Funding for the note was provided by investment company LHC Capital.

To complete the financing, Etherstack issued 6,666,667 convertible notes at a face value of 30c on August 27. Yesterday’s rally saw the stock price rise from 15c to a closing value of $1.75.

This afternoon, the company announced the conversion of half the original issue into 3,333,333 fully paid ordinary shares to LHC.

The Appendix 2A filed by the company said the conversion took place on June 30, 2020, which also marked the end of the 2020 financial year. At yesterday’s closing price, the shares would have an equivalent value of around $6m.

Along with Etherstack, LHC Capital also holds a stake in fintech payments company iSignthis (ASX:ISX), which has been suspended from the ASX since October and remains in dispute with the exchange over alleged breaches of listing rules.

When iSignthis went into suspension the stock was trading at $1.07, but in early May the AFR reported that LHC wrote down the value of its shares in the company to 5.1c.

Etherstack’s financial report for the year ended December 31, 2019 shows that as at March 20 this year, iSignthis was a Top 20 shareholder in the company with 410,000 shares, equal to 0.4 per cent of Etherstack’s issued capital.