Magnis taps lenders for high-cost loan as cash dwindles

The batteries and graphite group has told investors it may issue up to 300 million new shares to raise funds after tapping lenders for a $4.6m high-cost loan.

ASX-listed batteries and graphite player Magnis Energy Technologies has stopped paying its chair and three key directors as it seeks to stave off insolvency after losing control of its key North American asset to lenders.

In a market update on Wednesday, Magnis revealed it had just 0.2 quarters of funding remaining, with $532,000 cash in the bank.

But Magnis assured investors it had secured a $4.6m secured short term loan “from sophisticated and professional investors” set to tide the company over.

However, the loan is set to fall due on March 1 this year and is being charged at 5 per cent per month.

The company also told investors it was “in late stages of negotiations with several potential cornerstone investors, with a significant investment expected to be finalised during the current quarter” in a bid to raise further funds to keep Magnis afloat.

The Imperium3 New York factory has been revealed by Magnis to have produced no new cells in December. Picture: Supplied

Magnis said it had capacity to issue 300 million new shares in the company under listing rules.

Issuing up to 300 million new shares would be hugely dilutive to Magnis investors, with the company already having 1.19 billion shares on issue.

However, shares in Magnis remain suspended, with the company noting on January 10 the ASX remained concerned about its compliance with listing rules.

Magnis told investors its long-time chair Frank Poullas as well as directors Peter Tsegas, Fabrizio Pirelli and Hoshi Daruwalla had all stopped receiving funds for their roles at the company “to preserve funds”.

The company said Mr Poullas and Mr Tsegas had not been paid since July 1, 2023, “which also includes any related parties”.

Mr Pirelli has not been paid since July 31 when he joined the board, while Mr Daruwalla has not been paid since October 1 last year.

The new funding comes as Magnis dumped its subsidiary Imperium3 NY from its books after lenders took over the battery gigafactory after multiple breaches of a $US100m ($152m) loan facility.

Magnis said it was working with Atlas Credit Partners, the lenders on iM3NY, and their appointed lenders “regarding the refinancing of iM3NY and will keep the market informed of material developments”.

But Magnis has moved to deconsolidate iM3NY from its books after losing control of the battery factory.

“Cordial arrangements are in place, supported by a Deed Poll and protocols with the Lender Directors, thus ensuring the Company complies with its LR3.1 requirements to keep the market informed even during the suspension and whilst it ceases to control the Inc board,” Magnis told investors.

Magnis revealed it had burned $9.7m in cash in the last quarter to December 31, paying $3.9m in interest and other financing costs, including some costs for iM3NY.

In addition, Magnis paid $3.9m in administration and corporate costs, also including costs for iM3NY.

The company also repaid $2m in borrowings, offsetting the $4.6m in new cash received under Magnis’ new loan facility.

This all saw Magnis’ cash tumble from $14.8m at the start of the quarter to just $532,000 at December 31.

Originally published as Magnis taps lenders for high-cost loan as cash dwindles