Woodbois Ltd (AIM:WBI, OTC:WODBF) said it was "shocked" to receive notice from Sydbank, a lender to its subsidiary Woodgroup ApS, that it is terminating a US$6mln debt facility.
The Africa-focused forestry and timber trading company said the Danish bank has cited Woodgroup ApS's loss in Q1 2023 as the reason for the termination. Sydbank has requested a plan for the repayment of the outstanding US$2.9mln of the facility.
The company said it has reserved its rights on the basis of the validity of the termination notice, adding that its management does not agree with Sydbank's conclusion and believes that the company had been well placed to deliver a very positive performance for the remainder of the year.
The company said it is reviewing its internal cash-flow forecasts following this unexpected termination and, while it expects a difficult trading period in the short term, management believes that the fundamentals of the business are sound and will continue to work actively to find alternative funding sources in order to continue to grow the business.
Woodbois noted that it has cash balances outside the Sydbank account of US$430,000 and net trade receivables of US$1.5mln, and management believes that the company can continue to operate as a going concern in the short term.
"We were surprised to receive the notice of termination of the facility from Sydbank. We are reviewing our options and will explore alternative funding sources to continue our operations. Our focus remains on the growth of the business," said Paul Dolan, CEO of Woodbois in a statement.
Woodbois said it is working with restructuring professionals and taking all necessary steps to preserve the business, while undertaking a concerted contingency planning exercise. The company added that it will make further announcements as necessary.