(Sharecast News) - Shares in electric vehicle drivetrain technology company Saietta more than halved on Tuesday, after it announced the sale of a production line in Sunderland following its failure to secure a commercial agreement.
The AIM-traded firm said it had received a proposal amounting to £0.6m for the purchase of a redundant production line at its manufacturing site in Sunderland.
That stemmed from the inability to finalise a commercial agreement on an electrical steering pump contract manufacturing opportunity at the Sunderland facility, as it had previously disclosed.
Although the envisaged contract manufacturing deal was anticipated to contribute significantly to group revenue over the medium term, it did not materialise, leading to the sale of the production line.
Regarding its joint venture Saetta VNA, the company said it remained engaged with its lead OEM customer regarding the mass production of its proprietary AFT and RFT technology.
Several material contract opportunities with the customer had been outlined, including the supply of AFT and RFT for three-wheel eDrive vehicles, with pilot production underway and commercial production expected to start this year.
Additionally, for four-wheel eDrive vehicles, the firm said it was targeting an initial purchase order by the end of March.
Furthermore, Saietta said discussions with a separate OEM customer regarding the potential sale of its RFT eDrive for a two-wheel vehicle were continuing.
The firm said it aimed to receive a 'proof of concept' letter from the customer by the end of March, as previously indicated.
In terms of financial stability, Saietta said it had maintained positive cash balances to sustain operations until the end of March, as discussions with stakeholders regarding funding requirements beyond the first quarter continued.
"The strength of relationship with our lead OEM and the market opportunity for our eDrive solutions remains very compelling," said chief executive officer David Woolley.
"Being unable to agree terms on a contract manufacturing opportunity is no reflection on the quality of the company's products.
"The sale of the redundant production line in our manufacturing hub in Sunderland makes sense for Saietta in comparison to a relatively low margin contract to manufacture a non-core product under licence."
Woolley said that route allowed Saietta to remain wholly focussed on its strategic focus of providing proprietary eDrive solutions to manufacturers of lightweight electric vehicles.
"Whereas it does mean that Saietta will not benefit from contract manufacturing revenue from August, it will deliver the significant immediate benefit of pulling forward £0.6m of income and cash into the financial year ending March 2024.
"Alongside this activity, the board continues to work hard on securing additional funding to take Saietta through to being self-financing.
"The company will update the market as appropriate."
At 1423 GMT, shares in Saietta Group were down 53.13% at 7.5p.
Reporting by Josh White for Sharecast.com.
