Magnis lobs buy back bid for iM3NY lenders as graphite deal flops

The beleaguered group has told shareholders it will try to buy back its battery factory, with just $90,000 in the bank, despite earlier walking away from the project.

Magnis US boss Hoshi Daruwalla (left) and chair Frank Poullas (right). Picture: John Feder/The Australian

Magnis has lobbed a bid to buy back its failed battery gigafactory Imperium3 New York, revealing it was in discussion with lenders, despite an earlier attempt to source funding for l its graphite mine in Africa falling flat.

In an update to the market on Wednesday, Magnis said it had $90,000 but was now exploring buying the debt on iM3NY from lenders Atlas Credit Partners, who hold a $US100m ($147m) loan over the gigafactory which has been in default since November last year.

However, Magnis said iM3NY had generated no revenue in the quarter, despite being under control of Atlas Credit Partners.

Documents filed by the corporate regulator, in its court action with Magnis, allege the battery factory is insolvent and unable to viably produce batteries at scale.

The Australian Securities & Investments Commission alleges Magnis knew in January 2023 iM3NY needed a further US60m in funding to achieve production at scale.

Magnis said it was working with PwC to “source funding aimed at refinancing Imperium3’s existing secured debt”, noting it had made a bid to acquire the debt after being invited.

“The company has secured firm commitments from investors and has submitted a bid to acquire the Secured Debt. The company advises that it reserves its rights,” Magnis said.

But the attempt to buy the debts came after Magnis dumped iM3NY from its books in January in a bid to improve its financial position, in an accounting manoeuvre which incurred the ire of the ASX.

Staff at iM3NY, Magnis battery gigafactoy in Endicott, ASIC alleges the factory fails to produce viable cells. New York. Picture: Supplied

Documents published in March show Magnis general counsel Duncan Glasgow begged the ASX to accept it was a mining company, with a “shovel ready” project in its Nachu Graphite Project.

But the market operator warned Magnis it was relying on the Nachu project to allow it to deconsolidate iM3NY from its accounts, achieving a positive capital position, refusing to allow the company to return to trade.

In its Wednesday update, Magnis also told investors its attempts to secure funding for Nachu via Singapore-based funders PEY Capital in combination with Tanzanian firm Tantel had fallen flat.

The two companies were seeking at least $US320m for the Nachu project, but Magnis said it had terminated PEY Capital’s exclusivity “at the end of the quarter”.

This is despite telling shareholders that PEY was in an exclusivity period until 12 April.

Magnis said its directors were in discussions to source additional capital, after securing a new lender to scoop up a $4.5m high interest loan in the quarter.

The debt, charged at almost 54 per cent a year, falls due on October 16.

However, Magnis said it was continuing to source funding aimed at refinancing its debts over iM3NY “and thereby secure control of the battery factory”.

Magnis remains suspended from the ASX after being pulled from trade in December over concerns about the company’s disclosure.

“The company believes if it is able to successfully execute on this endeavour (to buy iM3NY’s debts) it will remove the concerns of the ASX, as set out above,” Magnis said.

However, Magnis warned shareholders its reinstatement is “not granted automatically”, noting the company may be required to “satisfy conditions” before being returned to trade.

Magnis chair Frank Poullas has been contacted for comment.