Magnis accounts reveal $16m in debts and payables, ahead of March 31 cash crunch

Magnis has revealed a ‘material uncertainty’ and growing concern over its financial future.

Frank Poullas, the chair of Magnis Energy Technologies, whose latest financial accounts revealed a pile of debts. Picture: Britta Campion

The last minute filing of Magnis Energy Technologies’ half year accounts has revealed a pile of debts and warnings over the financial future of the company, as questions linger over the fate of the company’s battery gigafactory.

The accounts, covering the six months to December, reveal Magnis’s increasingly dire financial situation, with $528,644 in cash in the bank and facing upwards of $16m in debts and trade payables. The tenuous financial position led Magnis auditors Hall Chadwick to warn the company’s future is in doubt, noting its status as a going concern was in jeopardy.

Hall Chadwick director Anh Nguyen said “that a material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern. Our conclusion is not modified concerning this matter”.

Mr Nguyen noted that although the company recorded a $14.4m paper profit over the six month period, this was the result of a derecognition of Magnis’s exposure to iM3NY and its $US100m ($147m) debt pile.

Magnis, a former ASX small cap darling, has seen its value plunge from almost $700m market cap to just $50m amid turmoil around its major investments and an exodus of directors.

The filing from Magnis following the departure of director Claire Bibby, a life coach and lawyer.

It came on the same day the ASX revealed weeks of mounting frustration with Magnis over its corporate conduct and market disclosures.

The ASX had taken Magnis to task over its failures to reveal critical financial details, including its $4.6m lifeline from a club of wealthy investors, and it demanded the company detail the terms of its loan.

However, Magnis’s latest filing reveals a previously undisclosed loan.

The accounts reveal Magnis tapped lenders for $2m in September last year before refinancing the debts to a $4.6m facility in November, secured against all its assets. This $4.6m loan, originally set to fall due on March 1 before being extended to March 31, sees Magnis face a mounting interest bill of 5 per cent a month and is likely to leave the company facing a $920,000 cash call in the coming days.

Money is still flowing out the door, despite Magnis’s earlier assurance that payments to chair Frank Poullas and directors Peter Tsegas, Fabrizio Pirelli, and Hoshi Daruwalla had been suspended.

The accounts reveal Magnis paid $324,822 in directors fees in the six months to December, up on the $312,345 reported in the same period a year prior.

Magnis also paid $178,980 in consulting fees and IT services to a company associated with Mr Poullas, Strong Solutions, which also employs his brother Emmanuel Poullas.

Magnis’s accounting treatment of its subsidiary iM3NY has not gone without criticism, with the ASX compliance team warning it would not tolerate the move to deconsolidate the gigafactory and taking aim at the company’s repeated disclosure failures.

Magnis is now seeking to recast itself as a graphite miner, with its Tanzanian mine Nachu now pitched as the future of the 16-year-old listed company.

Despite Magnis’s attempts to suggest it has extracted itself from iM3NY, the company has left the door open to regaining its interest in the gigafactory.

Magnis notes in its accounts that it is working with PwC to refinance its $US100m loan, but cautioned that despite meetings with potential investors “there can be no assurance that the refinancing efforts will be successful”.

Magnis is also still exposed to the fortunes of the battery factory, with the company noting in its accounts it had provided a $4.82m trade payable guarantee on debts incurred by a subsidiary in the six months to December.

Charge CCCV, Magnis’s venture partner in iM3NY, is also attempting to carry on with the factory despite the total breakdown in the relationship between the two.

Magnis, which has trumpeted its access to C4Vs technology moved to write down the value of its 10 per cent stake in the business to zero in the latest accounts.

This is despite shelling out hundreds of thousands over recent years on C4V, including $73,881 in the last six months.

Magnis insiders said these payments formed part of a scheme to incentivise C4V to provide “announceables”, with the ASX littered with inscrutable technical updates that battery industry figures said had little relevance to up-tempo statements accompanying them.

Despite a public court battle played out between C4V and Magnis over control of iM3NY and warnings the battery factory was likely to face insolvency in mid January little news has since arrived out of the US about the factory.

C4V boss Shailesh Upreti has ignored multiple attempts to contact him, while Atlas Credit Partners, who extended the $US100m loan to iM3NY has also kept silent in the face of uncertainty around the plant.

Despite all this Mr Upreti has been talking up the prospects of the battery plant in local media, telling Binghamton’s local network NewsChannel 34 the company had faced “challenges” amid price rises and “some operational issues”.

But Mr Upreti said iM3NY “needs to be capitalized” noting there were several investors “we are currently working with”.

“I do see that in several weeks to let’s say a 3-month time frame, we should have investors that will step forward and continue to ramp up,” Mr Upreti told media.

“I see whoever becomes the decision-maker would continue to take benefit from those and I’m anticipating that we will continue to grow.”

Mr Upreti also notes iM3NY is still applying for a $US850m US department of energy loan, but the company is expected to be handed a $US2m grant from the New York Empire State Development fund in April.

This is from a total $4m grant scheme and $3.5m in tax credits from the development program backed by New York governor Kathy Hochul, who replaced Andrew Cuomo after he resigned amid allegations of sexual harassment.

America’s most powerful democratic Senator Chuck Schumer has backed iM3NY’s attempt to access the massive loan scheme, with the company trumpeting his endorsements.

But glowing statements endorsing the factory have recently been stripped from the Senator’s website, with the US Senate majority leader recently endorsing a $US15m grant to Binghamton University’s New Energy New York project backed by a coalition of battery groups including C4V, but making no mention of iM3NY.

Originally published as Magnis accounts reveal $16m in debts and payables, ahead of March 31 cash crunch