Future Financing14 Jun 2017 11:47
Just starting to look at Fuel Cell companies.
This worries me (from the March Trading RNS, extracted and slightly cut down for space)
"Future Financing
The Group's challenge is to move an estimated cashburn of £1.6m per month after interest on the convertible loan notes, to a positive cashflow position over the next few years. The Group must continue to plan its strategy on the core assumption that its cashflow will derive mainly from product sales. Consequently, additional funds will be required to bridge the period to the Group reaching a positive cashflow position from trading activities, notwithstanding the current pipeline activities, given the likely time taken for conversion.
In the context of raising additional funds, the Board, in consultation with advisors, has concluded that it is unlikely for the Company to be able to access capital markets in the usual manner to bridge the gap between the current cash position of the Company and growing profitable sales to the level where the Company is generating free cash flow.
It is also considered not possible to achieve cash generation through further cost reduction alone, or to materially reduce the R&D and operating cost base further without negatively impacting core capability. A major non-operating cost, of c. £1.2m per annum, or 7% of total non-financing cash costs, relates to being a listed company and complying with best practice corporate governance and Board structure. The Board believes that with restructuring complete and access to public market funding uncertain, this position should be subject to urgent review.
Consequently, the Board recognises that discussions are appropriate with the principal holders of the Convertible Loan Notes, who are also significant shareholders in the Company, as to their intent with respect to their current equity stakes and their loan note positions, as well as to their appetite and ability to participate in a further financing for the Company.
As part of these discussions, the Board and advisors will be urgently reviewing all other options available to the Company and the Group, whilst recognising the circumstances that the Company faces. It should be noted that constraints exist which include the security granted over the Group's intellectual property portfolio (as part of the refinancing of the Company in 2016) in favour of the holders of the Convertible Loan Notes and the need to obtain the consent of a majority (by value) of the holders of the Convertible Loan Notes before further debt is taken on by the Company that ranks ahead of (or pari passu with) the Company's obligations to the holders of the Convertible Loan Notes."
i.e. we need more funding, and we're asking the loan note holders if they're willing to take the company private. Who knows what that would mean for private investors? Given this is AIM, unlikely to be good news. I will watch until this is resolved before investing.
GLA
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