Substrate AI and its parent company Subgen AI have communicated a reorganization of their international structure, with which they intend to concentrate all of the group’s artificial intelligence activities within Substrate AI, for a total amount of 40.5 million euros.
With this operation, the group aims to “significantly enhance” its operating efficiency, simplify its corporate structure, and permanently establish Substrate AI as the main vehicle for the development, deployment, and commercialization of all its AI solutions on a global scale.
Under the agreement reached, Substrate AI will purchase from Subgen AI the stakes in Deltanova, Binit, and Subgen AI Spain Sociedad Limitada—companies in which the AI activities that had not yet been integrated within the perimeter of Substrate AI were concentrated.
The total consideration set for the shares of these Subgen subsidiaries amounts to 40,500,000 euros, a figure determined based on the fair market value of those stakes, according to the independent valuation report prepared by the firm Baker Tilly Advisory Services.
The payment of the price will be structured through the cancellation of internal debts between companies, the delivery of Class A and B shares, and the issuance of a convertible bond in favor of Subgen AI AB.
The debts to be extinguished total 24 million euros, while the remuneration in A and B shares amounts to 5 million euros, and the convertible bond issued in the name of Subgen AI AB will have a nominal value of 10 million euros.
This convertible bond, granted to Subgen AI AB, will be mandatorily convertible, with a maturity of 8 years from the closing date, and it will accrue a compounded annual interest rate of 7% (PIK interest).
The interest generated will not be paid in cash; instead, it will be accrued and paid exclusively through its exchange for new Class A or B shares of Substrate AI.
Under no circumstances may the convertible bonds be redeemed in cash, since they will be converted into Class A or B shares at a standard conversion price equivalent to 125% of the “volume-weighted reference price” (VWAP) of Substrate AI’s Class A or B shares on BME Growth during the five consecutive trading days prior to the signing of the agreement.
With this operations integration, the group strengthens its external presence in Europe and Latin America under a single strategic direction, improving its ability to meet the strong dynamism of the corporate Artificial Intelligence market.
The effectiveness of all these agreements is subject to approval by the respective boards of shareholders of both companies, as well as to the sign-off of the competent regulatory authorities.