Liquidity wheels turn slower for Carbon Revolution

Prospa co-CEOs Greg Moshal and Beau Bertoli Picture: John Feder

Automotive wheel maker Carbon Revolution’s move to reprice its equity raising on Tuesday was telling and reveals the challenges groups are facing when it comes to securing liquidity.

The shares are now being sold at $1.50 each to raise $25m through a placement, equating to a massive 40.2 per cent discount to the last closing share price of $2.51, and came after it tried to raise $30m through a placement and a share purchase plan at $2.10 a share.

Bell Potter and E&P Corporate Advisory had been working on the transaction.

Carbon Revolution only recently floated on the market, and it raises the question what other challenges could lie ahead for companies that have recently listed on the stock exchange.

One company at the centre of much discussion this week is small business lender Prospa.

The company’s model was offering short-term loans of up to about $200,000 to small businesses while charging higher-than-normal interest rates.

However, with small businesses expected to be hardest hit due to COVID-19, particularly companies in the hospitality and retail industry, the expectation is that Prospa will feel the impact.

Prospa’s shares have moved from around $4.46 when it listed in June last year to 81.5c on Tuesday. Its market value is now $130m, compared to more than $700m last year.

No doubt it will be in talks right now with the banks that assisted it for its listing: Macquarie Capital and UBS.

Its loan receivables at the half year were $431.6m and it has $417.2m of total liabilities and made $4.3m in earnings before interest, tax, depreciation and amortisation for the six months to December.

When delivering its half-year results last month, Prospa reiterated its 2020 financial year guidance, saying it expected to deliver loan originations of between $626m and $640m and revenue of more than $150m for the full financial year.

However, it has not yet issued any guidance as to whether that guidance still stands.