LONDON (Alliance News) - Shares in Photonstar LED Group PLC dropped almost two-third Wednesday after the company looked to liquidate its LED fixed lighting business due to continuation of difficult trading conditions.
Shares in Photonstar were 63% lower at 0.050 pence on Wednesday.
Photonstar announced it had appointed John Cullen of Menzies LLP and instructed him to call a meeting of shareholders and creditors for November 19. The meeting will look to place its traditional LED fixed lighting business PhotonStar LED Ltd into liquidation.
The liquidation will take effect immediately with the unit ceasing trading as of Wednesday.
Photonstar emphasised that although the subsidiary generated most of its revenue, it also attracted the "majority" of its trading losses.
For the six months ended June, its fixed LED lighting unit generated GBP1.1 million of its total GBP1.3 million revenue.
In addition, most of the facility borrowing at the firm was held through its subsidiary and to the overall debt of the group "should be significantly reduced" by the move. The firm believed the "vast majority" of the liabilities and assets of PhotonStar LED Ltd were "ring-fenced" from the rest of the business.
"The losses that have been incurred over the last few months mean that whilst the group's remaining trading subsidiary PhotonStar Technology is able to continue trading as a going concern in the immediate short term, additional funds will be required," Photonstar explained in a statement.
The firm is currently considering all available funding options. These include the issue of shares and new debt financing.
"There is no guarantee that such funding will be available to the group or that the terms of such funding will be acceptable," Photonstar cautioned. "As such, it is possible that the group itself may not be able to continue trading as a going concern beyond the short term."
Earlier on Wednesday, Photonstar announced PhotonStar LED Ltd was continuing to experience "very challenging" trading conditions amid ongoing "competitive price pressures" in October. This was after the expected demand for its circadian lighting products did not materialise.
The firm added that new management forecasts for the remainder of 2018 suggested the unit would "not experience the same level of seasonal growth" in the fourth quarter of 2018 as has "historically" been the case.
Consequently, Photonstar had said it was now "considering the options" for Photonstar LED Ltd. The firm posited a potential "distressed" sale as one option with the possibility of putting the firm into administration another. In calling in the administrators, Photonstar explained, it would hope to reduce the debt of the overall group as well as overheads and operational losses.
In addition, 2019 revenue forecasts now had "significant uncertainty" around them.
Photonstar Technology Ltd - the company's building internet of things firm - remains focused on its v2 halcyon cloudBMS software. This includes its "low cost, retrofittable wireless monitoring and control platform, halcyon PRO2, and the upgraded cloud service platform, cloudBMS."
Despite this, it has yet to sign a "material contract" for the roll-out of Halcyon V2 despite ongoing discussions with "several" potential customers and previously announced trials.
