Seeing Machines enters collaboration with Magna, includes US$65M investment
10 October 2022
Seeing Machines Limited, an advanced computer vision technology company that designs AI-powered operator monitoring systems to improve transport safety, has entered an exclusive collaboration agreement with Magna International to pursue driver and occupant monitoring system business targeting the vehicle’s interior rear-view mirror. At the same time, Magna is also investing $65 million in the company.
Under the terms of the Agreement, subject to certain exceptions, Seeing Machines and Magna will exclusively co-market driver and occupant monitoring, solely where the company’s IP is fully integrated inside the rear-view mirror, until the end of June 2025.
In return for Seeing Machines granting exclusivity to Magna for the mirror, Magna will make an upfront payment to Seeing Machines of US$10 million, with an additional US$7.5 million payable over the following 2 years.
At the same time, Magna has also agreed to invest up to an additional US$47.5 million into Seeing Machines via a non-transferable 4-year convertible note maturing in October 2026. The Convertible Note, which can be drawn down in two tranches across the 4-year term, subject to the satisfaction of certain closing conditions, is convertible into ordinary shares at a price of 11 British pence per share. The first tranche, being US$30 million, will be drawn at closing with the remainder available until December 2024. The Convertible Note has an all-in yield of 8%, inclusive of fees.
Magna may elect to convert the principal and at Seeing Machines’ election, interest outstanding under the Convertible Note at any time during its term, up to a maximum of 349,650,350 shares which, when added to Magna’s existing shareholding in the Company, will represent approximately 9.9% of the fully diluted share capital of the Company. The Convertible Note contains standard covenants, and anti-dilution provisions. The interest due at the end of the facility can be paid in cash or converted into equity at Seeing Machines’ election.
As driver monitor systems start to become more standard safety technology, we see a lot of potential to lead the change with our integrated driver and occupant solution, an industry-first when it hits the market. Our solution addresses growing automaker challenges associated with managing vehicle electronics integration and cost, with the need for seamless camera packaging across a diverse line of vehicle models. It also opens up new possibilities for the integration of other ADAS vehicle technologies.—Sharath Reddy, Senior Vice President Magna Electronics
As previously announced, Seeing Machines has worked with Magna to help deliver integrated mirror technology to the market. (Earlier post.) The rear-view mirror offers an effective cabin camera position and field of view for both driver and occupant monitoring for many passenger vehicles, enabling OEMs to meet the Euro NCAP and regulatory standards associated with driver distraction and impairment. The mirror is also suitable to support expanded interior occupant view which will enable a range of safety and convenience features inside the cabin.
Given that more than 60% of Seeing Machines revenues is in US dollars, there is a large degree of natural hedge in place and Seeing Machines will begin reporting in US$ from the start of the current financial year.