AIQ Secures Up to £2m via Convertible Loan Notes to Boost Data Centre and AI Infrastructure Push

AIQ has announced a fresh funding package that could bring in up to £2 million, with an initial £0.5 million already issued. The money is coming through unsecured, interest-free convertible loan notes, which is a financing tool that starts as debt but can later turn into shares.

For retail investors, the headline is simple enough: AIQ is raising cash to keep moving on its data centre and AI infrastructure ambitions, while also reshaping older loan notes to make them cheaper for the business to carry. That is helpful for cash flow, but it also increases the chance of future dilution if these notes convert into equity.

AIQ convertible loan notes deal – the key facts investors need

New funding facility	Up to £2 million
Initial amount issued	£0.5 million
Remaining amount available	Up to £1.5 million
Latest date for further tranches	14 August 2026
Interest rate	Interest-free
Security	Unsecured
Conversion price	5p per ordinary share
Expiration date	3 July 2028
New noteholder	China International Securities Ltd

The new investor is China International Securities Ltd, described by AIQ as a Hong Kong-based securities firm. Management clearly wants shareholders to see this as more than a cash injection – it is also pitching CISL as a supportive long-term partner attracted by the prospects of AIQ Vision.

Why AIQ is raising cash for data centres and AI infrastructure

AIQ says the proceeds will be used for working capital, including pushing ahead with data centre construction projects and supporting AIQ Vision. Working capital is the day-to-day cash a business needs to operate, so this is not just expansion money – some of it is there to keep the engine running.

The company also says some of the proceeds may go towards debt repayment. That matters because it suggests management is trying to juggle growth plans with balance sheet pressure, rather than charging ahead without regard for existing obligations.

Strategically, the message is all about AI infrastructure. AIQ is leaning into demand for generative AI and “data sovereignty”, which means countries increasingly want important data stored within their own borders. If that trend continues, local high-specification data centres could become more valuable.

That said, this is still a funding story rather than a contract win. The RNS talks about opportunity and positioning, but it does not disclose new revenue, profit, or signed project values. Investors should keep that distinction front of mind.

What the 5p conversion price means for AIQ shareholders

The new loan notes can be converted into ordinary shares at 5p each. If the full £2 million is drawn and then converted, that would equate to 40 million new shares. The initial £0.5 million note alone would equate to 10 million new shares if converted.

That is the trade-off with convertible loan notes. They are often easier to secure than straight equity at the outset, and here they are interest-free, which is clearly positive for near-term cash preservation. But if converted, they dilute existing shareholders by increasing the total number of shares in issue.

There is one useful protection here. CISL cannot convert if doing so would take it, together with any concert parties, above 25% of AIQ’s issued share capital or voting rights immediately after conversion. So there is a cap on how far this single new noteholder can build its stake through conversion alone.

Another practical point is that AIQ can reject a conversion notice if issuing the shares would require a prospectus. In plain English, that gives the company a procedural brake if conversion would trigger more onerous listing paperwork.

AIQ amends existing convertible loan notes – better cash terms, more dilution risk

Alongside the new funding, AIQ has amended older convertible loan note facilities first executed on 24 January 2022. This is an important part of the announcement because it changes the economics of existing debt as well as bringing in new money.

The main amendments are:

• The expiry date of the existing loan notes has been extended to 3 July 2028.
• The conversion price has been changed to 5p per ordinary share.
• The noteholders have agreed to forego any future interest from 3 July 2026.
• The existing loan notes are now freely transferable, subject to KYC and AML checks.

KYC and AML mean “know your customer” and anti-money laundering checks. In practice, that means the notes can be sold on, but only after the proposed new holder passes compliance procedures.

The interesting bit here is the bargain AIQ has struck. The company gets relief from future interest payments, which is good for cash flow, but it gives up ground by lowering the conversion price to 5p. Lower conversion prices make conversion more attractive, so the chance of dilution rises.

One limitation in the RNS is that the total value of the existing loan notes is not disclosed here. That means shareholders can see the change in terms, but not the full potential dilution attached to those older facilities based on this announcement alone.

Related party transaction explained – should investors worry?

The existing noteholders are treated as related parties because their combined shareholdings are 38.5%, and one of them, Li Chun Chung, is an Executive Director. Related party deals always deserve a closer look because the people involved may have influence over the company.

AIQ says Harry Chathli, the Independent Non-Executive Chairman, considers the amended terms fair and reasonable for shareholders. That is the required governance reassurance, and it is better than seeing insiders push through changes without independent sign-off.

Still, investors should not ignore the bigger picture. Existing insiders have agreed to waive future interest, which is supportive, but they have also secured a lower 5p conversion price and longer maturity. So this is not a one-sided concession to the company – it is a compromise that helps AIQ now while potentially increasing future share issuance.

Is this AIQ funding announcement good or bad for shareholders?

The positive case for AIQ

The obvious positive is funding. AIQ gets access to up to £2 million, and the first £0.5 million is already in hand. For a company pursuing capital-intensive areas like data centres and computing infrastructure, having fresh money available can make the difference between keeping momentum and stalling.

The second positive is cost. These new notes are interest-free and unsecured, which reduces immediate financing strain. On top of that, the existing noteholders have agreed to forego future interest from 3 July 2026, which should further ease cash burn.

The negative case for AIQ

The downside is dilution, plain and simple. A 5p conversion price on both new and amended existing notes means the path to more shares in issue is now easier to see. If AIQ’s share price strengthens, conversion becomes more likely.

There is also execution risk. The company is talking up data centres, AI demand and data sovereignty, but the RNS does not include fresh operating numbers or project-level milestones. Investors are being asked to back the strategy before seeing fuller proof of commercial traction in this announcement.

My take on AIQ’s £2 million convertible loan note raise

On balance, this looks cautiously positive for AIQ in the short term. The company has secured flexible funding, reduced interest burden, and bought itself more time until 3 July 2028. For a business building in an expensive and fast-moving sector, that matters.

But it is not free money. Shareholders are effectively paying for that flexibility with a lower conversion price and a higher risk of future dilution. If AIQ uses this capital to land meaningful progress in AIQ Vision and data centre development, the deal could look sensible. If not, investors may end up with more shares in issue and not much to show for it.

That is the real test from here. This RNS improves AIQ’s financing position, but the next thing shareholders need is evidence that the strategy is turning into commercial results.