TranSwitch Corporation (NASDAQ: TXCC) a leading provider of semiconductor solutions for multimedia connectivity and processing today announced that it has entered into a common stock purchase agreement with Aspire Capital Fund, LLC, an Illinois limited liability company. Aspire Capital has committed to purchase up to $11 million of TranSwitch’s common stock over the next two years at prices based on the market price at the time of each sale. On execution of the agreement, Aspire Capital made an initial purchase of 990,099 shares of common stock for $1,000,000, which was approximately a 5% discount to Friday’s closing price of $1.07.
“We continue to make great strides in transitioning our business and growing our opportunities for HDplay™ video products. In concert with the recently announced $8 million reductions in annual operating expenses, we believe this agreement should give us access to the cash necessary to execute our business plan,” said Dr. M. Ali Khatibzadeh, President and CEO of TranSwitch. “Aspire Capital will purchase shares from TranSwitch for its own account which allows Aspire to become a meaningful and long-term shareholder in the company. We look forward to working with Aspire as we continue to advance our entry into the high growth video connectivity market. In tandem, we are continuing to pursue monetization of certain non-strategic assets including our legacy patent portfolio in order to further bolster our balance sheet and enhance execution of our growth plan.”
Key aspects of the Purchase Agreement include:
- TranSwitch will control the timing and amount of any sale of common stock to Aspire Capital and will know the sale price before directing Aspire Capital to purchase shares.
- Aspire Capital has no right to require any sales by the Company, but is obligated to make purchases as the Company directs, in accordance with the terms of the Purchase Agreement.
- There are no limitations on use of proceeds, financial covenants, and restrictions on future financings, rights of first refusal, participation rights, penalties or liquidated damages in the Purchase Agreement.
- The Purchase Agreement may be terminated by TranSwitch at any time without additional cost or penalty.
- TranSwitch has issued to Aspire Capital additional common shares as consideration for entering into this agreement.
- In connection with entering into the Purchase Agreement with Aspire Capital, the Company terminated the At Market Issuance Sales Agreement with MLV & Co. LLC Capital entered into and announced in February 2012.
The common stock issued or to be issued under the agreement was or will be issued pursuant to the Company's shelf registration statement on Form S-3 (File No. 333-162609). The Company will file a prospectus supplement with the Securities and Exchange Commission in connection the transaction dated July 17, 2012. A more complete and detailed description of the Purchase Agreement with Aspire Capital is set forth in the Company's Current Report on Form 8-K, filed on July 17, 2012, with the U.S. Securities and Exchange Commission.