Magnis warns of sale or shutdown for battery gigafactory if rescue deal not found
Shares in ASX-listed Magnis remain suspended amid uncertainty over its New York battery gigafactory.
Magnis Energy Technology claims it is solvent, but says it risks having its flagship battery factory sold or shut down by lenders, admitting delays in revealing critical information to the market.
In an update on Monday, Magnis said it had accepted the lender on its battery gigafactory Imperium3 NY “was entitled to and has in fact exercised its rights to change the composition of the board” on December 6, days after being notified of its intentions.
This was despite Atlas Credit Partners, which funded the $100m credit facility for iM3NY, warning Magnis of its intentions to take control of the battery gigafactory on December 1.
Shares in Magnis were placed in a trading halt on December 6 after The Australian revealed it had lost control of iM3NY after Atlas Credit Partners moved to appoint its own management.
Magnis told investors its shares would remain suspended from trade amid continued uncertainty over the fate of Imperium3 NY as the ASX-listed battery and graphite play faced off with its technology partner Charge CCCV in the joint venture.
Magnis recently agreed to a temporary pause in hostilities with C4V after the US battery technology company hauled Magnis to court alleging an illegal board coup at iM3NY.
The fight between C4V and Magnis will be heard on January 2, amid warnings iM3NY has enough money to last only until January 15.
“While Magnis will defend these proceedings if they in fact progress to a final hearing, it is also seeking to resolve the matter with C4V outside of court, with the primary aim of refinancing [iM3NY],” the company said.
The deal signed with C4V requires unanimous approval of the board of iM3NY for any deal.
Magnis said it was “engaging” with the new directors of iM3NY, appointed by the lenders, “with the view to assisting it and manage [iM3NY] from an operational and financial perspective and, ultimately, to potentially see control of the board pass back to Magnis, including by seeking to procure alternative financing to refinance the credit facility”.
But Magnis warned there was a risk it may not be able to resolve the credit breaches. “If Magnis’ efforts are unsuccessful, it is possible that Magnis’ economic interest in the battery facility will be diluted, the battery facility will be sold by the lender and/or the battery facility will cease to operate,” the company said.
“The occurrence of any of the possible eventualities referred to in the preceding paragraph will likely have an adverse (albeit, presently unquantifiable) impact on Magnis’ financial performance and condition.”
But Magnis sought to push back on claims it “may be insolvent”, a charge C4V has alleged in its court filings as it fights with Magnis. In its full-year accounts, Magnis revealed it had $1.1m in negative equity.
“While the financial implications on Magnis of the loss of control of the board of, or any subsequent dilution of its economic interest in, (iM3NY) are not presently known, it is not expected that either such eventuality would have a material direct impact on Magnis’ solvency,” it said.
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