Shares in Alphawave Semi fell sharply following the announcement of its $150m convertible bond issuance.
- By issuing convertible bonds, Alphawave aims to support its growth, focusing on research and development, capital expenditures, and other corporate needs.
- Despite an increase in bookings by 20% over the past year, Alphawave reported significant financial challenges, including a steep decline in sales and increased losses.
- Revenue predictions were adjusted downward due to changes in the business mix and the consolidation of development programs.
- The company foresees an uplift in production from its investment in chiplet and connectivity technologies by 2025.
Alphawave Semi’s share price experienced a significant drop, losing up to 20% of its value in early trading. This reaction followed its announcement to raise $150 million through convertible bonds. The bonds will be issued at par, featuring a 3.75% annual coupon, to be paid semi-annually until their maturity in 2030. The company plans to allocate the funds towards growth strategies, particularly enhancing research and development, capital expenditures, and general corporate purposes, with potential use for debt repayment.
The company has identified strong bookings, posting a 20% increase compared to the preceding year. However, Alphawave recorded a substantial downturn in its financial performance. In the first half of the year, sales amounted to $91 million, marking a 51% reduction compared to the previous year. The reported post-tax losses surged over four times to $40 million, with the company’s debt experiencing a 42% increase to $142 million.
This downturn is attributed to a strategic shift in the company’s revenue composition, focusing more on IP licenses and silicon, and markedly reducing its legacy China business. This transition reflects a broader structural change in the company’s business approach, aligning with its future growth objectives in more promising technological domains.
Earlier, Alphawave had to revise their full-year revenue projections downward from $345-$365 million to $310-$330 million. The adjustment was largely due to the merger of two major AI clients in Korea, which led to the consolidation of ongoing development programs, thereby impacting expected revenue streams.
Founded in 2017, Alphawave operates across key global markets from its bases in Toronto and London, and has set its sights on ramping up production capabilities in chiplets and silicon connectivity by 2025. This anticipated growth is central to overcoming current financial challenges and stabilising their market position.
Alphawave’s strategic initiatives in research and development are poised to lay a foundation for a resurgence, despite current financial adversities.
