|Compact Power Holdings
||EPS - Basic
||Market Cap (m)
Real-Time news about Compact Power (London Stock Exchange): 0 recent articles
|katylied: Apparantly, at the current cash burn of £200,000/month, the company will be more or less out of money by the end of the current financial year on 31/03/2004 (....as at 12th December 2003 the company's cash balances stood at £1.3m of which #0.5m is committed for the completion of the sterilisation plant...). A more optimistic view might give them a couple more months, but that is largely irrelevant since no auditor will sign off the full-year accounts as a going concern with the balance sheet in such dire straits.
So they must raise more money. They need at least £2,000,000 (or guarantee of) before April, to be funded for another financial year. They have implied that they intend a share issue to to achieve this. The possibility of pulling some new contracts out of the hat (within the next couple of months) that massively increase turnover prospects, appears at the stage, to be vanishingly small. A possible wild-card might be to sell off a large interest in their tangibles (Avonmouth?), but that would be more or less the first step to liqidation and shareholders would probably prefer to have the cash rather than let the company continue to burn it.
This looks to me like a 1:1 'rights issue' at about 10p/share or maybe an 2:3 'open offer' at maybe 15p/share. Getting either underwritten will likely be a major problem. At the current share price, I can't see how they could raise that much cash through selected placings at any higher price. They would have to give away something like 40% of the company to raise enough cash. Anyone who wanted it that bad, would be better off staying on the sidelines and waiting for the fire-sale.
I reckon a 1:1 rights is their only real option and their chances of getting it away successfully are pretty grim. In fact thay might as well go for 2:1 and try to get £4,000,000 otherwise the same problem could easily occur again next year. Even if they do get a 'rights' away and survive, I would anticipate a massive share overhang for months to come and a share price sub 10p inevitable at some point.
If they are planning a 'rights' shouldn't they have called for an EGM by now? I suppose someone might bid to take them private but I doubt small shareholders will get much out of that. I wonder if management is now trapped in a state of paralysis? They look like they could be well and truely up sh*t-creek without any kind of credible paddle and the terminal rapids are approaching fast.|
Compact Power share price data is direct from the London Stock Exchange