LONDON (Alliance News) - Ceramic Fuel Cells Ltd Monday said it has raised about GBP3.36 million in a placing and also signed a deal with an investor which will lead to an investment of between USD3 million and USD8.5 million, money it needs to keep going after a recent big order collapsed.
In a statement, the fuel-cell generator company said Bergen Global Opportunity Fund LP would invest the funds in return for various securities the company will issue.
The placing and the Bergen agreement need shareholder approval and the company will hold and extraordinary general meeting April 28.
Ceramic Fuel Cells needs the funds after a deal to supply generators to a customer in Estonia collapsed. In February, Ceramic Fuel Cells deemed that Synergy International OÜ was in breach of contract after the Estonian distributor missed a second deadline for paying for BlueGen units it had ordered, meaning the British company had to look at options for securing ongoing support for its business.
Ceramic Fuel Cells had already started a manufacturing programme for the order and bought components. That hit its cash flow.
"The build-up of inventory for the Synergy order has meant that CFCL has been required to identify other sales opportunities in order to reduce inventory levels at the earliest opportunity. Whilst replacement sales orders are currently being sought, the situation has had a significantly detrimental effect on the company's cash flow," it said.
"As a consequence of this, CFCL now urgently needs to raise further working capital of at least AUD5.5 million (approximately GBP3 million)," it added.
Ceramic Fuel Cells is also now restructuring to address its future activities and resource requirements, cutting its operating costs partly by reducing its direct sales resource in both Germany and the UK.
Earlier this month, the companyt received an order for 100 of its BlueGEN units, for delivery within 12 months, from the German company Avilos GmbH. At that time it also reported that its pretax loss narrowed slightly in its first half of its current financial year as revenues rose 31%.
Its placing consisted of 672 million new shares placed at 0.5 pence each.
Under the Bergen deal, The New-York based investor has agreed to invest a minimum of USD200,000 a month for up to 12 months in return for Ceramic Fuel Cells shares. The monthly investment may be increased to a maximum of USD700,000 if both parties agree.
Bergen will also buy a USD250,000 convertible security from Ceramic Fuel Cells when the deal is executed, and another USD350,000 convertible security 100 days after the first funding as long as Ceramic Fuel Cells can satisfy certain conditions, mainly that it has a cah balance of more than USD3 million.
Ceramic Fuel Cells shares were down 18.9% at 1.2375 pence Monday, one of the biggest declines on the London market.
By Steve McGrath; stevemcgrath@alliancenews.com; @SteveMcGrath1
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