NOT FOR DISSEMINATION TO U.S. NEWSWIRES OR DISCLOSURE IN THE UNITED STATES

TORONTO, April 01, 2019 (GLOBE NEWSWIRE) -- POET Technologies Inc. (“POET” or the “Company”) is pleased to announce that it has successfully arranged over C$10 million of financing, representing the minimum amount of funds needed to bridge the Company to the previously announced anticipated sale of its DenseLight subsidiary.  That sale is scheduled to be completed in September 2019, subject to certain conditions including shareholder and other approvals. The Company expects to generate cash proceeds of approximately C$34.2 million to C$39.5 million upon completion of the DenseLight sale. 

The first component of the financing consists of the issuance of up to C$14 million principal amount of 12% convertible unsecured debentures (the “Convertible Debentures”) of the Company. The Convertible Debentures will be sold in multiple tranches over upcoming months, as needed, on a brokered private placement basis through the Company’s financial advisors, IBK Capital.  Closing of the first tranche of Convertible Debentures, for gross proceeds of approximately C$1.9 million, is expected to occur on April 3, 2019, subject to final approval by the TSX Venture Exchange. Further indications of interest amounting to C$1.6 million from parties who could not participate in the first tranche are expected to be included in subsequent tranches.

Insiders of the Company are expected to subscribe for over 47% of the first tranche of Convertible Debentures, including the Company’s board of directors, senior management team and financial advisors, IBK Capital.  Successive tranche closings in the coming months are each subject to approval by the TSX Venture Exchange.

The second component of the financing consists of a credit facility (the “Bridge Loan”) to be provided by Espresso Capital Ltd. The Company has signed a term sheet for the Bridge Loan that, subject to execution of definitive loan documents and the approval of the TSX Venture Exchange, will give the Company access of up to C$6.6 million (US$5.0 million). The Company expects to sign the loan documents on April 3, 2019 with the initial advance under the Bridge Loan of C$2.6 million (US$2.0 million) occurring shortly thereafter.

Thomas Mika, the Company’s Executive Vice President and Chief Financial Officer, said: “The significant investment made by management and the board clearly demonstrates our strong confidence in the long-term success of POET. Additionally, as indicated when we announced the proposed sale of DenseLight, we upheld our commitment to finance the Company without pursuing a highly dilutive equity raise.  The combination of the two forms of financing, when completed should comfortably exceed our needs over the next several months, giving us maximum flexibility. The continued offering of Convertible Debentures is intended to allow our stockholders and new prospective investors to participate in the future growth of POET Technologies.”

The proceeds of the financing are expected to be used to advance the Company’s optical interposer platform and for working capital and general corporate purposes.

The Convertible Debentures will bear interest at a rate of 12.0%, payable monthly in arrears, and mature twenty-four (24) months following the date of issue. The principal amount of Convertible Debentures outstanding will be convertible, in whole or in part, at the sole discretion of the holder, into units of the Company (“Units”) at any time on or after November 1, 2019 at a price of C$0.40 per Unit. Each Unit is comprised of one common share and one common share purchase warrant (a “Warrant”). Each Warrant entitles the holder to purchase one common share of the Company at a price of C$0.50 per share at any time on or prior to forty-eight (48) months following the date of issue. Holders of Convertible Debentures will have the option to cause the Company to redeem the outstanding principal amount of such Convertible Debentures at par following the completion of the DenseLight sale. IBK Capital will be paid a broker fee of 5.0% of the gross proceeds raised from the sale of Convertible Debentures.

Funds drawn under the Bridge Loan bear an annual interest at 15% over the time that any advance is outstanding, with an additional 2.5% annualized payable when the advance is repaid (subject to adjustment in certain circumstances).  The Bridge Loan matures on December 31, 2019. Following the signing which is expected to occur on April 3, 2019 and subsequent funding, the Company may request advances from time to time from Espresso Capital, subject to an advance fee payable to Espresso of 2.0% of the amount of each advance. In the event that either party terminates discussions in connection with the sale of the Company’s DenseLight subsidiary (described in the Company’s press release of February 4, 2019) all amounts outstanding will become due and payable within 60 days. The definitive documentation for the Bridge Loan will also impose customary financial and other covenants, reporting obligations, events of default and other requirements on the Company while amounts under the Bridge Loan are outstanding. Additionally, the Company has agreed to issue to Espresso Capital, in consideration for the advancement of the Bridge Loan, 3,289,500 common share purchase warrants (the “Lender Warrants”), with each Lender Warrant entitling the holder to purchase one common share at a price of C$0.50 at any time on or prior to forty-eight (48) months following the date of issue. The issuance of the Lender Warrants is subject to approval of the TSX Venture Exchange. Advances under the Bridge Loan will be secured by a general security interest in favour of Espresso Capital over all of the assets and undertaking of the Company.

The securities to be issued pursuant to the financing (including the Convertible Debentures, Lender Warrants and any securities issued on conversion or exercise thereof (including the Warrants or common shares issued as a component of the Units, on exercise of the Warrants or on exercise of the Lender Warrants) if prior to such date) will be subject to a hold period of four months.

The securities referred to in this news release have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any applicable securities laws of any state of the United States, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (as such term is defined in Regulation S under the U.S. Securities Act) or persons in the United States unless registered under the U.S. Securities Act and any other applicable securities laws of the United States or an exemption from such registration requirements is available. This press release does not constitute an offer to sell or a solicitation of an offer to buy any of these securities within any jurisdiction, including the United States.