SemiLEDs Corporation (NASDAQ:LEDS) has reached an agreement with Peter Chiou that will see the company sell more than 0.5 million shares to the investor at a price of $5 per share. That investment will give Chiou a stake of almost 20% in LEDS. For the company, the investment is a much-needed financial boost.
Chiou is set to acquire 557,000 shares in SemiLEDs Corporation (NASDAQ:LEDS) and each share will cost him $5, which works out to an investment of nearly $2.9 million. With that, equity ownership of Chiou in LEDS will be 19.6%.
SemiLEDs has not disclosed where it intends to put the cash injection from Chiou. But the funds could go into projects to grow revenue or paying down debts. If you look at the company’s balance sheet drawn at the end of 1Q2016, what you see is debt amounting to $3.14 million. You also see that LEDS has been activity reducing its debt position. A year ago it had total debt of about $5 million on its balance sheet and in the last quarter the debt was about $3.5 million.
SemiLEDs Corporation (NASDAQ:LEDS) – Convertible notes
In addition to purchasing common stock shares in SemiLEDs for $5 apiece, Chiou has also shown interest in buying convertible notes in SemiLEDs that will mature toward the end of next year. Chiou plans to put $1.62 million in the convertible notes whose due date is September 29, 2017. When the time comes, the notes will convert to common stock shares.
SemiLEDs Corporation (NASDAQ:LEDS) will not receive the investments from Chiou all at once. The funds will be remitted to it in three installments. The first installment payment is $1 million and SemiLEDs has already received that money in its bank account. The second installment will be $1.89 million and the money will be wired to the company’s bank account on or before August 15. The third installment will come on September 29 and it will be $1.62 million, which as you can see relates to the convertible notes.
As such, SemiLEDs Corporation (NASDAQ:LEDS) is hoping to get investment of close to $4.5 million from the investor Chiou.