Member Info for Happysurfer

I do wonder if the market is getting a bit twitchy in regards to the CLN element of the strategic investment. The conditions need to be satisfied by Sep 30th which clearly appears very unlikely given that leaves 2 months for the EISA to be issued and the funding package to be finalised.

The terms can be extended but no guarantees and market does not like uncertainty. I don't think anyone, including the BOD, thought we would still have an EISA pending all these months later.

It pains me to say but 0.75p a couple of days before the placement got forward sold is looking an extremely attractive exit price; 0.4p not so.

The Mgt team appear completely out of the depth with regards to financial forecasting and cash flow mgt which is indeed extremely worrying.

Personally I hope they can settle the debt facility with equity as i am more certain than every they are going to need every penny they can get their hands on so 5m at 1p looking a really good deal now but perhaps unlikely.

I think this is the key change.

We were always led to believe that we were stand alone in having 10 years plus of operating the tech as conclusive evidence of its commercial viability in practice. It now seems the Tier 1 partners et al believe there remains technology risk (perhaps as it evolves) and hence want further evidence of its commerciality. This requires a sea change in terms of the overall operating model and comes at much cost and delay; where we currently are.

Management do now appear someone deflated and i think it is a reluctant acceptance of the fact that the challenges are mounting; not insurmountable for sure but increasing nevertheless. They are trying to maintain first mover advantage against a backdrop of limited capital. They really need some deeper pockets to help out here but it sounds a bit chicken and egg in that the Tier 1 will not stump up the cash until have the evidence of commercial tech and on and on.

and the absolute highlight with reference to Revenue forecast 'We always set ambitious targets"...........read as completely fanciful target/projections that we do not have a hope in hell of hitting so have to tap the market with emergency funding like last week and that will not be the last of it.

Uninspiring is an understatement.

So in a nutshell we got the operating model wrong working with micky mouse outfits on a number of projects who were nice guys but had no cash. We are now looking to work increasing with Tier 1 partners but they still see execution risk in the technology hence require further evidence of plants operating for a period of time to demonstrate the tech; only then can we attract the capital we really need.

Market is pants in general, net zero has been pushed to one side for now and we are all fighting in the same space for limited capital with risk averse partners.

That £3m raise is the tip of the iceberg. I cannot see how it will be long before they will be tapping the market again but at what price next time ?

QED

We all genuinely hope you recover some of your 6 figure losses on PHE. Unfortunately I fear not given their cash position and visibility of earnings or complete lack of.

Regarding the delusional narcissism I may be able to help you. Interested ?

Good luck buddy. Life is not meant to be easy and you are a casing example.

The days have gone when an RNS tie up with the likes of Toyota/petrofac added 0.5p+ to the SP. the market simply knows it means EQT to have to find more cash in due course.

All about WC now and getting some cash in the door. That £3m is not going to last long and running out of Taps to turn on.

If still believe in the long term story then it might just be presenting a great opportunity as Amati continue to drag us down below placement price. You pays your money…..

Indeed the new strategy appears to be to run a pseudo ponzi scheme using different forms of finance to repay the other. First take out a bridging loan, then a placement to repay the bridging loan and when placement funds run out shortly.?...........perhaps we can sell the IP rights to fund BOD salaries for 12 more months.

Sorry getting cynical but this now bordering on ineptitude.

I recall after the last 0.5p PB placement a couple of years back we dropped back into the 0.3s which honestly would not surprise me if history repeats itself especially as amati unwind.

The irony is not lost that this emergency placement will likely be used to repay the Riverfort 5m debt over the next few months which itself was supposed to be a "Bridging loan" in the companies own words. So not only can we not afford to repay the bridging loan we likely cannot issue shares to satisfy it (below 1p strike price) and we also cannot draw down on the 2nd 5m tranche (or else they simply would have)..........honestly you couldn't make this up

How long before the likes of Toyota, Wood start to seriously question themselves partnering with "micky mouse" outfits like EQT on major projects; in the same way we were about Kibo.

If we are having to rely on emergency PB £3m raises to effectively keep the ball rolling, which make no mistake this is exactly what this is, then it cannot be long before their Risk & Compliance departments start to seriously question our credentials as genuine partners.

How do you get 50% of placing went to Directors & Altair Simms ?

I make it only 15% so not really that signficant.

They took 117m in aggregate out of 782m in total

The point is why go to all the effort and expense of obtaining a main market listing to try and attract capital and liquidity to then throw it all away with a "misplaced tick in the box"!.

The chances of them raising significant funds in london now are virtually zero with that qualified audit report.....therein lies the issue and is why we still sit at 90p mid.

I am speechless.

Firstly they could have got this away and for more cash at circa 1.25p before the dreadful CLN type arrangement was announced. Secondly they still have £5m available to drawdown on the Riverfort facility so why issue equity outside of this arrangement.

Seriously losing faith in management here as this just smacks of desperation.

Agree C909, had just posted the same re. issue of equity.

The mutually agree is indeed an interesting one. My personal view is Riverfort would have forward sold the 5m drawdown as they do not work with equity exposure. I recall the SP went from 1.25p to 1p in the days running up to the drawdown hence if they are ultimately issued equity at circa 1p they bank the margin on the hedge.

If they did not hedge the equity exposure then, as you say, one would expect them to decline the offer of equity but either way I expect EQT to push for equity issuance for as long as the SP is <1p

I actually think they will elect to issue shares no matter; even though the reality of the situation will likely be they have no other option.

The equity will be issued somewhere between 1p and 1.1p so it is effectively a premium to where the SP is today. Yes it will be dilutive but ultimately they could not raise funds anywhere near 1p+ as it currently stands. With so many projects requiring what appears to be continued investment to keep them on track then they may as well issue equity at a premium to preserve cash.

The biggest issue with this is they are a main market listed business seeking large investment to fund their expansion plans. Up until now they have failed to get any institutions on the register in part due to management credibility and part geopolitical risk. Consequently strong governance and adhering to regulatory requirements should be of paramount importance to them in order to rectify these perceptions.

Funding options have obviously dried up in Moscow and hence they are now talking about getting a UK broker. They have completely shot themselves in the foot with this qualified audit report as it will now be nigh on impossible to attract funds in London; even more so than before.

Remain invested, admittedly at a reduced level, just because the valuation is crazy low on a pure PE basis; nevertheless they are not helping themselves and personally think the road to recovery is going to be a long one. We have not even really bounced back from the recent lows.

The challenge is that even if landed a chunky sponsorship deal with a couple of mil up front that is still only 3 months cash. I just cannot see how they avoid a cash call. The Beckham deal is killing them and is not sustainable at present. Payments should be linked to performance is some way.

Amazed have agreed a 10 year lease although to be fair there is a 5yr exit clause and I recall 24 month up front rent free. so in reality they are giving themselves 24 months to try and get the business on sound footing.

Yeah they a churning through cash consistently at 700-800k per month. Cash balance @June means they only have about 4 months cash left so are now in critical need of a new significant sponsorship deal; even then receipts are staged so it is looking like a cash call either way in the next couple of months.

The challenge is how much can they raise and at what SP. The IPO price looks a million miles away for the time being. Perhaps they can get Beckham to defer his payments until the company is hopefully more established as otherwise his company is going to drag them under without payment anyway. If they do a raise and the cash just goes straight to Beckham it is fairly pointless.

No fund raise required as they have another 5m facility to draw down on as and when needed.

The one saving grace is when, as expected, they start issuing equity to settle the original 5m loan it is at least issued at just over 1p and not todays SP. I recall the agreement was the avge of the SP on the 5 days preceding the draw down.

The 2nd 5m drawdown settled at these 0.5p levels will however be costly. I do not think this is far away to be honest.

Need to revisit that September presentation as I recall capex required to get to 1m TPA was >$100m over 2022/3; now it is only $38m to achieve the same so clearly the dial has moved. Unless of course further processing plant capex is required on top of the 38m. This is part of the issue the numbers keep changing. There is also about $27m of debt to repay over the next couple of years so self funding out of FCF will still be tight. They could really do with rolling the $10m bond due for repayment in Dec.

I don't think we will see a significant re-rate here until the ownership structure is resolved however. It just seems that this, in conjunction with perceived geopolitical risk, outweighs the operational and financial progress at present.

DOF's comment re. HKEX listing of another Assaubayev vehicle is interesting and perhaps there is some read across here; although what that would means for the completely superfluous london listing is not clear.