Velo3D has announced a securities purchase agreement with ‘certain affiliated institutional investors’ for the purchase and sale of up to 105 million USD in aggregate principal amount of the company’s senior secured convertible notes in a registered direct offering (RDO).
A registered direct offering is considered to be a way for public companies to raise capital from a select group of investors, with senior convertible notes containing an option for the note to be converted into a predefined amount of the issuer’s shares.
Velo3D says it expects to issue 70 million USD in aggregate principal amount of the notes at the initial closing of the offering on or about August 14, subject to the satisfaction of customary closing conditions. The company has also granted the investors the right to purchase up to an additional 35 million USD in aggregate principal amount of the notes so long as the notice to exercise such option is provided no later than the first anniversary of the initial closing. Velo3D is projecting that the net proceeds from the initial closing will be approximately 66 million USD, after deducting estimated fees and expenses payable by the company, with approximately 22 million USD being used to repay outstanding indebtedness under its existing credit facility with Silicon Valley Bank. The remaining net proceeds will be used for working capital, capital expenditures and general corporate purposes.
The RDO comes after Velo3D announced its Q2 results for 2023, which indicated the company had fallen behind its revenue guidance of 120-130 million USD, with a revised target of 105-115 million USD in place. This has been explained by a ‘delay in Q2 bookings signings.’
Through this RDO, the notes will have an initial conversion rate of 475.1722 shares of the company’s common stock per $1,000 principal amount of the notes (equivalent to an initial conversion price of approximately 2.10 USD per share of the company’s common stock). The initial conversion price represents a premium of approximately 15% to the 1.83 USD per share closing price of the company’s common stock on August 9, 2023. The initial conversion price will adjust to 110% of the average of the three daily volume-weighted-average prices (“VWAP”) of the Company’s common stock during the three-trading day period ending on and including August 17, 2023, if such average is lower than the initial conversion price, with a corresponding adjustment to the conversion rate. The conversion rate will also be subject to customary anti-dilution adjustments and adjustments for certain corporate events. Subject to certain conditions, the Company can require conversion of the Notes if the closing price of the Company’s common stock exceeds 175% of the conversion price for at least 20 VWAP trading days in a 30 consecutive VWAP trading day period.
Velo3D announced its decision to list publicly on the New York Stock Exchange through a SPAC with JAWS Spitfire Acquisition Company in March 2021 at an enterprise value of approximately 1.6 billion USD. Today, its market cap sits at 348.44 million USD, with a share value of 1.81 USD. More details on the company's registered direct offering can be found here.
