Magnis Energy Technologies is still suspended from the ASX but says it’s solvent and raising funds
Magnis Energy Technologies is suspended from ASX trading but says it’s negotiating to secure $US2m from a US grants program.
Former market darling Magnis Energy Technologies insists it is solvent and in negotiations to secure funding from new customers as it faces a continued market suspension over concerns surrounding its financial future.
As it entered its fifth day of suspension, while nursing a cratering of its share price, Magnis revealed it was in line to secure $US2m ($3.1m) as part of a $US13.25m grant program from the New York State’s Empire State Development fund.
But Magnis, which was pulled for the second time from trading by the Australian Securities Exchange’s listings compliance team on Tuesday, is still no closer to returning to the trading boards as questions linger over its financial future.
Magnis US managing director Hoshi Daruwalla told The Weekend Australian the company was “solvent”, noting it was “working to secure more funding”.
Mr Daruwalla said Magnis and C4V, which provides the designs of batteries at the Imperium3 NY battery factory, were in advanced talks with “foreign private institutional companies and governments regarding offtake agreements of the lithium cells produced at the iM3NY battery plant”.
“These negotiations include an element of a forward purchasing deposit, which is intended to cover the funds needed by the business in the short term,” he said.
“Once these arrangements have been finalised, Magnis will be in a position to assess its funding position and, if required, will approach the retail investor market, as is common with all ASX-listed companies.”
This comes as the stock exchange questioned auditors’ statements over the financial future of the company.
In its latest set of accounts, Magnis disclosed a $76.4m loss in the year driven by borrowing and production costs.
The company also revealed it was sitting at $1.1m negative equity after a jump in liabilities and a tumble in assets dragged down the company’s balance sheet.
Hall Chadwick auditor Anh Nguyen said there was “material uncertainty” as to Magnis’ “ability to continue as a going concern”.
The report noted Magnis was also facing a $15.6m cash crunch in the year ahead as the almost $150m in borrowings weighing on the company begin to fall due. But Mr Ngueyn noted Magnis had “ assessed its ability to make further share placements (and /or secure Debt Finance)” to fund itself.
In response to the accounts, the ASX moved to keep Magnis in suspension after the company failed to file its accounts by the end of September.
ASX listings compliance senior adviser Angel He said the market operator had “concerns regarding the qualified audit opinion disclosed with the Full Year Statutory Accounts”. Magnis now faces a potential barrier to returning to trade and raising further funds.
Australian Securities & Investments Commission rules require listed companies to issue a prospectus alongside a rights issue if it has been suspended for more than five days.
“We consider that the underlying policy of the five-day requirement is to ensure that securities and other financial products are adequately priced by the market and that the market is fully informed,” ASIC’s guide notes.
The continuing delays around Magnis also present potential troubles for the energy player returning to trading boards, as clients walk away from orders with its New York-based battery gigafactory. In an announcement to investors on Friday, Magnis revealed Premier Solar had walked away from a $US20m deal to purchase cells from its iM3NY factory which the ASX-listed company has poured millions into building.
However, Magnis said the move by Premier Solar was “not material” as it represented less than 5 per cent of the previously announced total offtakes for iM3NY, which it claims are worth $US965m.
Premier Solar had signed on to a five-year deal in 2017 with Magnis to use the company’s batteries with its solar panel business.
Three more customers – Energence, Green World Corp and Energy Link 3 – are in talks with Magnis over the potential renegotiation or extension of their offtake deals with iM3NY.
Sukh Energy, Martac, and EGYAI have all renewed or extended their deals with iM3NY.
Magnis said the delays in obtaining certification for its cells from iM3NY had resulted in the need to renegotiate the deals, which had also tanked the company’s forecasts of funds rolling in from sales.
Magnis chair Frank Poullas has previously told investors the battery factory would deliver $80m in revenue in 2022, rising to $360m in 2023 and $1.8bn by 2027.
Magnis said it had booked some sales in the previous quarter for cells at iM3NY as clients picked up some for product qualification.
Magnis has repeatedly tapped the market for funding, locking in a $35m from Evolution Capital and L1 Capital and Regal.
Shares in Magnis are well down from their 73c peak in 2021, falling to 7.4c by the time of their suspension. However, Magnis’ OTC Markets Group listing, covering US trading, is down more than 53 per cent in the past five days after Magnis was pulled from trade in Australia.
Magnis’ shares in the US were poised to open at just US2.5c on Friday, giving the company just a $US48.9m market cap.
The strife at Magnis follows the departure of short-term CEO David Taylor who announced he would quit the firm in June just 10 months after taking on the job.
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