‘They can’t believe such a deal’: Novra Technologies secures equity play

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This article was published 13/09/2024 (623 days ago), so information in it may no longer be current.

Novra Technologies Inc., a Winnipeg-based hardware and software firm that’s been making niche technologies for television and radio networks for more than 20 years, is the epitome of a low-profile company.

Even though it has been publicly traded on the TSX Venture exchange for all that time, it has a modest business-to-business market and has never really grown its revenue base.

This week, however, it announced a $12.3-million debt financing, with a two-year term with a remarkably low fixed interest rate of one per cent per annum.

Novra CEO Harris Liontas said he’s has to spend a lot of time on the phone with regulators at the TSX explaining the unusual terms.

“They can’t believe such a deal,” he said Friday. “They think there must be something wrong and that maybe someone is scamming someone.”

The terms of the deal — which has not yet closed — includes the opportunity to convert the loan to equity at a strike price of 34 cents. When the deal was announced Tuesday, Novra’s shares were trading at four cents; they have since climbed to 12 cents.

“This is really an equity play,” said Liontas. “It is not really a loan, per se.”

Liontas said the “lender” is a private wealthy U.S. family holding company that has interests in real estate, technology and other vertical markets.

Although its identity has not been disclosed, Liontas said its interest is in having a beachhead in the Canadian market. He said the lender sees potential value in the company for the long term, thus the outrageously high valuation.

The funds will be used to pay off Novra’s modest outstanding debt and for working capital and continuing research and development. Liontas insists substantial R&D investment over the past several years has positioned the company well for future growth.

So, despite, the fact revenue is down 46 per cent to $1.8 million in the six months ending June 30, compared to the same period the year before, Liontas said global economic conditions in post-COVID-19 have created all sorts of pent-up demand among its customers to upgrade technical infrastructure.

The company sells its specialized products to manage the distribution of multimedia broadband content to major television and radio networks in 100 countries around the world.

In the past few years, it’s acquired a couple of small technology companies in Ottawa and Atlanta. Liontas said it gives the company the ability to manufacture either in Canada or the U.S., depending on potential protectionist trade rulings.

martin.cash@freepress.mb.ca