The convertible note removes near-term liquidity risk but creates a persistent dilution overhang — the investor can convert at 97% of VWAP (floor $1.93) daily up to $2M notional per day, subject to existing 2028 notes outstanding. The EUR 37M repeat order and planned upward guidance revision provide fundamental support. Watch the Q2 business update on July 14 for revised FY2026 order intake guidance and conversions of the existing 2028 notes to lift the VWAP-conversion restriction.
Price Chart
Executive Summary
SCHMID Group entered into a $20M convertible note financing with Linden Advisors (Linden Capital L.P. and affiliates) to fund working capital and China plant expansion, while simultaneously announcing a repeat order >EUR 37M for advanced mSAP production equipment from a major Chinese customer and reviewing an upward revision of FY2026 order intake guidance. The convertible notes (5% PIK, due 2029, issued at 99% of par) convert at the lower of $10.50 or 97% of VWAP (floor $1.93), creating significant dilution potential. The order and guidance revision confirm strong AI-driven demand, but the company's negative equity position and the dilutive structure temper the positive signals.
Key Facts
- $20M aggregate principal amount of 5.0% Convertible Senior PIK Toggle Notes due 2029 issued at 99% of par to Linden Advisors LP and affiliates
- Notes mature in 2.5 years (January 2029), interest at 5% compounded quarterly and payable-in-kind (PIK) with Company option for cash pay
- Conversion price is the lower of $10.50 initial fixed price or 97% of VWAP (Lowest or Average), with a floor of $1.93 per share
- Repeat order exceeding EUR 37M for advanced HDI-ML and mSAP production equipment from a leading Chinese customer for AI server board and optical module applications
- Company reviewing upward revision of FY2026 order intake guidance; expects to communicate revised quantitative guidance with Q2 2026 business update on or about July 14, 2026
- Order intake for H1 2026 was EUR 44.3M excluding this order, EUR 81.7M including it
- Outstanding shares as of filing date: 65,675,726 ordinary shares; 1,490,000 shares issued under the Yorkville SEPA
- Net proceeds to fund working capital needs from order intake acceleration and growth capital for China manufacturing plant move from rented to owned with nearly double capacity
- Notes are guaranteed by German operating subsidiary Gebr. Schmid GmbH, subject to German law limitations
Financial Impact
$20M convertible note proceeds (net ~$19.8M at 99% issue price) plus EUR 37M (~$40M) repeat order. FY2025 revenue was €66.9M; FY2026 revenue guidance >€100M per prior 20-F. Order backlog was €50.9M per prior 20-F.
Risk Factors
- Dilution risk from convertible note conversion at 97% of VWAP with no minimum conversion price floor above $1.93
- Negative equity position and high leverage as reported in the prior 20-F (net loss €71.1M, finance expenses €72.2M)
- Mandatory amortization of $1.5M/month in cash if registration statement fails (step-up interest triggers), adding cash drain
- Historical Nasdaq compliance issues — company is under mandatory panel monitoring period until February 19, 2027
- Ongoing litigation with Validus/StratCap could result in material judgment
Market Snapshot
Investment Themes
Documents Analyzed
This report is based on 7 SEC documents filed with EDGAR.
| Document | Accession Number |
|---|---|
| 6-K Filing (Primary) | 0001104659-26-081360 |
| Document: tm2619931d1_6k.htm | 0001104659-26-081360 |
| Document: tm2619931d1_ex99-1.htm | 0001104659-26-081360 |
| Document: tm2619931d1_ex99-2.htm | 0001104659-26-081360 |
| Document: 0001104659-26-081360-index-headers.html | 0001104659-26-081360 |
| Document: 0001104659-26-081360-index.html | 0001104659-26-081360 |
| Document: 0001104659-26-081360.txt | 0001104659-26-081360 |
Filters
| Type | Now | ||||
|---|---|---|---|---|---|
Oct 21, 2026 6d ago | 6-K | $3.11 | awaiting T+5 | — | $2.98 (−4.18%) |
Oct 1, 2026 26d ago | EFFECT | $4.45 $3.97 | ▼ −10.69% | ▼ −11.99% | $2.98 (−32.96%) |
Oct 1, 2026 26d ago | EFFECT | $4.45 $3.97 | ▲ +10.69% | ▲ +11.99% | $2.98 (+32.96%) |
Oct 1, 2026 26d ago | EFFECT | $4.45 $3.97 | ▼ −10.69% | ▼ −11.99% | $2.98 (−32.96%) |
Oct 1, 2026 26d ago | EFFECT | $4.45 $3.97 | ▼ −10.69% | ▼ −11.99% | $2.98 (−32.96%) |
Sep 8, 2026 7w ago | Insider Cluster | $3.35 $3.20 | ▼ −4.48% | ▼ −3.36% | $2.98 (−11.04%) |
Aug 25, 2026 9w ago | 6-K | $3.42 $3.11 | ▼ −9.06% | ▼ −8.53% | $2.98 (−12.87%) |
Aug 25, 2026 9w ago | Press Release | $3.42 $3.11 | ▲ +9.06% | ▲ +8.53% | $2.98 (+12.87%) |
Jul 24, 2026 13w ago | EFFECT | $4.12 $4.04 | ▲ +1.82% | ▲ +2.20% | $2.98 (+27.58%) |
Jul 14, 2026 15w ago | 6-K | $4.34 $4.38 | ▲ +0.92% | ▲ +1.90% | $2.98 (−31.34%) |
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