IQE CEO enters share repurchase deal

On 2 August, Dr Nelson sold 11m ordinary shares to the provider at a price of 43.96p per share, in effect securing a loan of around £4.8m under what is known as a sale and repurchase agreement. The chief executive will pay interest to EFH until he repurchases his shares for the same price at the end of a three-year term, which concludes on 2 August 2022. Typically, an EFH client will pay interest of between 3 per cent and 4 per cent on a quarterly basis.

Dr Nelson’s voting rights on these shares are waived, but the provider would pay him any income that arises from dividends – although IQE has never paid a dividend in its history. Under the terms of the agreement, EFH is prohibited from voting on or short selling the shares. Dr Nelson retains a beneficial interest of 4.56 per cent in the company, which includes the shares sold to EFH.

IQE said that Dr Nelson will mostly use the money raised from the deal “to satisfy income tax and national insurance obligations” due on 7,681,199 share options exercised earlier this year. The rest of the funds “are intended to be used to fund future tax liabilities and NI due on the exercise of share options if they arise, as well as fund further potential share purchases and cover any margin calls which may occur under the agreement,” the company added.

IQE’s chief executive entered into an identical agreement with EFH in October 2014, which saw him borrow around £2.1m and buy back 18m shares at 11.44p apiece three years later, in order to fund the purchase of 1.8m in shares along with obligations connected to an earlier exercise of 4.8m options. Between 10 October 2014 and 10 October 2017, IQE shares rose in value from 12.75p to 127.75p, an increase of 10 times.