Chinese optical systems vendor ZTE Corp. (H: 0763.HK/A: 000063.SZ) has invested CAD$2.7 million ($2.3 million) in Canadian optical components and subsystems supplier Enablence Technologies Inc. (TSX VENTURE: ENA).
The non-brokered private placement financing is an extension of previous financing of up to CAD$10 million ($8.6 million) in July 2014 that Enablence has undertaken over the last several months, some of which was delayed because of various third-party approval processes (see "Enablence Technologies adds funding, subtracts board member").
Under the terms of the new deal, ZTE will receive 18 million newly issued common shares in the company at a price of CAD$0.15 per share.
The proceeds from the financing are expected to meet certain obligations, including the repayment of bridge and short term loans, and provide working capital to Enablence.
The pair also said that they have entered into a continuing business cooperation agreement, which covers existing and future research and development collaboration and product supply arrangements. Products covered under the agreement include Enablence's TOSA/ROSA products. The volume requirements of ZTE for products covered under this agreement are expected to increase significantly during the next 12 to 24 months, while Enablence is expected to meet certain undisclosed milestones in connection with the agreement.
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