Alphawave Semi, a semiconductor firm, saw its shares plummet following a significant financial move.
- The company issued $150m in convertible bonds with a 3.75% annual coupon rate.
- Funds from this bond will bolster Alphawave’s R&D, capital expenditure, and growth.
- Recent financial struggles impacted Alphawave, including a reduced revenue forecast and increased debt.
- Despite challenges, Alphawave’s bookings reportedly grew by 20% compared to the previous year.
Shares in Alphawave Semi experienced a notable decline, dropping by up to 20% during early trading. This decline occurred after the company announced the pricing of a $150 million convertible bond. These bonds will be issued at par with a 3.75% coupon rate, payable semi-annually in March and September, from March 2025 to maturity in 2030.
The proceeds from the bond issue are intended to support Alphawave’s growth objectives, particularly in research and development, capital investments, and possibly debt reduction. Alphawave has stated that these funds will play a crucial role in enhancing their corporate activities.
In September, the company adjusted its full-year revenue projections, reducing them from a range of $345m-$365m to $310m-$330m. This adjustment was attributed to the merger of two sizeable AI clients in Korea, which led to the consolidation of development programmes. Although revenue forecasts were cut, booking figures appear robust, showing a 20% increase over the previous year.
Financial reports for the first half of the year revealed that Alphawave generated $91 million in sales, which marked a 51% drop compared to the previous year. In addition, the company’s losses after tax increased substantially, rising to $40 million, while its debt levels surged by 42% to reach $142 million. The decline in sales was linked to a strategic pivot in the business’s focus, including revenue derived from IP licenses and a sharp decrease in their legacy operations in China.
Alphawave explained that their decreased earnings were a result of significant investments in R&D, particularly in chiplets and novel silicon connectivity products. These investments are anticipated to escalate production in 2025. Founded in 2017, Alphawave operates from Toronto and London and has expanded its presence globally in China, Europe, and Korea. Currently, the company employs over 800 individuals worldwide.
Alphawave’s recent financial manoeuvres highlight their strategic focus amidst a challenging economic backdrop.
