Magnis admits to no production or revenues despite its AGM presentation
Magnis Energy Technologies has admitted it wrongly told investors its battery gigafactory would churn out cells and sales in December, when in fact it was idle.
Magnis Energy Technologies has admitted it wrongly told investors at its annual general meeting that its battery gigafactory would churn out cells and sales in December, when in fact it was idle.
In an update marked as not market sensitive, Magnis said its battery gigafactory, Imperium3 New York, did not produce any cells or revenues in December, despite assurance to investors the plant was “on target to achieve a daily production run of 300 cells by December 2023”.
Instead, Magnis on Wednesday told investors it had “since been informed by the new board of (iM3NY) that this is not the case and that there was no production in December 2023, nor any revenue generated in that month”.
This is despite Magnis (US) managing director Hoshi Daruwalla telling shareholders at the AGM the company was planning to lift production to 1000 cells per day on the back of fully automated production at the gigafactory.
“If you can take my word for it, contracts are not an issue iM3 faces,” Mr Daruwalla told shareholders at the AGM.
The move to walk back Magnis’ revenue and production claims comes as the company faces an investigation by ASIC over “suspected false or misleading statements and breaches of continuous disclosure obligations”.
Magnis has made repeated promises about the production pipeline at iM3NY. The company’s chair, Frank Poullas, has time and again assured investors commercial manufacturing would begin and rapidly ramp up.
In November 2021 Mr Poullas said iM3NY would be “starting commercial production within weeks”, but limited production only began in August 2022 – and the company was still hampered by delays in certification sign-off on the finished cells well into 2023.
In June last year Magnis told investors it had secured certification on cells, noting key customer Sukh Energy would start receiving cells in the second half of 2023.
As revealed in The Australian, Sukh Energy, which has signed deals worth $243m, is run by a handful of staff and its principal manager works part-time in IT.
Magnis has not booked any revenues from iM3NY, only noting in October that it had purchased $464,000 in cells from the gigafactory for use in its Tanzanian resettlement village.
Magnis has poured millions of dollars into iM3NY over the years, but the capital-hungry operation has proven a heavy burden for the company which revealed $1.1m in negative equity across its consolidated accounts in October.
Magnis revealed it was facing $15.6m in debt repayments in the year ahead, with just $22m in cash reserves.
Atlas Credit Partners, which lent iM3NY $US100m ($147m), hit Magnis with eight separate breaches of the loan agreement in October, warning that the battery gigafactory was running up millions in unpaid invoices, had failed to pay interest, and alleged almost half the machines in the factory were “not performing to specification”.
Magnis is still suspended from trade on the Australian Securities Exchange after The Australian revealed Atlas Credit Partners had moved to take control of iM3NY in November on the eve of the annual general meeting.
Atlas Credit Partners stripped Magnis’ directors and loyalists from iM3NY, warning Magnis’ attempts to remove the management of the gigafactory and impose its own rescue plan were in breach of loan covenants.
This came after Magnis attempted to take control of iM3NY, by inserting a new director on the company’s board, triggering a breakdown in the relationship with key joint venture partner Charge CCCV.
C4V, which is 10 per cent owned by Magnis, has given the exclusive use of its technologies to Magnis for use in North America.
Documents filed in the Delaware Chancery Court reveal C4V claimed Magnis took control of the board in an attempt to stymie its own proposal for iM3NY after presenting a $US48m rescue package.
C4V claims Magnis, which owns 73 per cent of iM3NY, would be “effectively insolvent” if it were unable to include the battery factory on its balance sheet.
In its update Magnis said its three directors on iM3NY, Mr Poullas, Claire Bibby, and Giles Gunesekera, had now resigned from the board of the limited liability corporation that sits above the gigafactory in the corporate structure, as part of a peace deal with C4V.
Lawyer for Magnis K&L Gates partner Steven Caponi previously told a court these directors would resign “in order to resolve this dispute” with C4V and secure an investment “needed to extinguish the debt held by IM3NY’s secured lender”.
On Tuesday Magnis pointed shareholders to a court order dated January 3, under which the company agreed to “not seek to change composition of the board of LLC until 31 March 2024, except it can challenge any change to the board of LLC under the terms of the status quo order”.
Magnis told shareholders it had also put in place arrangements with the new board of iM3NY, which was controlled by the lenders and C4V boss Shailesh Upreti, to “keep the market informed of material matters occurring at iM3NY”.
However, Magnis said the ASX “does not consider these current arrangements to be sufficient for Magnis to comply with its Listing Rule 3.1 obligations”.
Magnis also said Atlas Credit Partners had extended a $US3.3m lifeline to iM3NY to fund working capital at iM3NY and that the lenders had capitalised the interest payment due on December 2023 to the existing debt.
Magnis said it was still working to refinance the $US100m loan with an alternative lender.
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