LONDON (Alliance News) - Ceramic Fuel Cells Ltd Thursday said it has decided that Synergy International OÜ is in breach of contract after the Estonian distributor missed a second deadline for paying for BlueGen units it had ordered, meaning the British company is now having to look at its options for securing ongoing support for its business.
Back in November, Ceramic Fuel Cells had announced an order to supply 1,000 BlueGen units to Synergy, with half to be supplied in 2014 and the rest in 2015. This key deal was secured on the basis of a cash prepayment from Synergy for the first 500 units to be delivered in 2014.
The funds had initially been due to be paid by the end of 2013, but Ceramic Fuel Cells agreed to an extension until February 18. However, it hadn't received funds by February 19, and so had decided Synergy is in breach of contract.
"We are continuing to communicate with (Synergy International) and it is unclear as to why this prepayment has not been honoured. At this time the board of CFCL feel it is highly unlikely that the prepayment is going to be received in the near future," the company said in a statement.
"Consequently the company is currently exploring other options with a view to securing ongoing support for our business activities,"added the developer of fuel-cell technology generators to convert natural gas into electricity and heat for homes and other buildings.
Ceramic Fuel Cells' shares had soared when it announced the deal. It had said the take-or-pay agreement would enable it to significantly strengthen its working capital position in response to market requirements. It had also noted that one of Synergy's main partners and shareholders was Tameo Grupp, one of the biggest wholesalers of electrical materials in Estonia.
In late December, Ceramic Fuel Cells raised GBP3.2 million through a share placing and overseas offer, money it was hoping to use to fund its existing operations, to increase production so that it moved towards its target of becoming cashflow positive, to improve its engineering to drive down manufacturing costs, and to fund research and development programmes.
Its shares were down 36.8% at 1.2 pence Thursday morning, one of the biggest declines on the London market.
By Steve McGrath; stevemcgrath@alliancenews.com; @SteveMcGrath1
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