Enablence Technologies finds bridge funding
Enablence Technologies Inc. (TSX VENTURE:ENA) says it has staved off insolvency via a US$3 million bridge loan from a California bank. To raise even more cash, Enablence announced it also will sell its wholly owned photodiode business, ENA Switzerland.
Enablence Technologies Inc. (TSX VENTURE:ENA) says it has staved off insolvency -- for the time being, at least -- via a US$3 million bridge loan from a California bank. To raise even more cash, Enablence announced it also will sell its wholly owned photodiode business, ENA Switzerland.
The bridge loan will enable Enablence to remain in business while it finalizes the renegotiation of certain secured notes payable worth a total of approximately US$11 million. Company management says it expects to finalize the revised payment terms this month. The bridge loan will be guaranteed by a third party secured against the company. Enablence did not reveal the identity of the California bank or the third-party guarantor.
Enablence has been bleeding cash for some time, despite selling off several parts, including its systems unit to Aurora Networks (see “Aurora Networks buys Trident7 PON line from Enablence Technologies”). Company management revealed at the end of May that it was almost out of money, it had stopped making payments on its $3.0 million convertible debenture, and was in violation of bank covenants for a $2.8 million secured note payable (see “Enablence Technologies management warns of insolvency”).
While the notes were due on June 23, 2012, the note holders have agreed not to begin collection actions while the payment renegotiations remain ongoing, the company now says. Enablence management is also looking for additional financing, either from strategic or financial investors.
Money from the sale of ENA Switzerland (formerly Albis Optoelectronics) will be used to partially repay the bridge loan and the note holders, as well as fund continuing operations.
"This bridge loan and the planned sale of ENA Switzerland is a significant step towards putting Enablence on a sound financial footing so that the company can secure its long-term future and continue to provide its customers with reliable and uninterrupted products and services going forward," said Peter Dey, chairman of Enablence. "Thanks to the continued support of our Tier 1 customers and key suppliers, we have been able to operate normally through the month of June. We expect to report an increase of over 30% in revenues for the June quarter as compared to the March quarter.
“Furthermore, our joint-venture company, Sunblence Technologies, has begun shipping its first commercial splitter products and is aggressively ramping up capacity to meet anticipated growth in local access markets,” Day added. “We will provide more details when we report our year-end results later this summer."