Versarien PLC (AIM:VRS, OTC:VRSRF) cautioned investors that its anticipated sale of its South Korean assets is now not expected until "next year" and it is now deemed likely that the sale will raise less upfront cash than first thought.
The company, in a statement, called a new general meeting for a shareholder to enable changes to its capital authorities, so that it has greater flexibility to raise additional funds. Specificically, it noted that it wishes to sub-divide its share capital and renew its share capital authorities.
“The company continues to pursue its stated turnaround strategy and it is the view of the board that the company now has a pipeline of opportunities that could result in an improvement in the financial condition of the company in the short to medium term,” Versarien said in a statement.
It added: “The sale of assets remains an integral part of the turnaround strategy, but fundamentally, the board now has sufficient confidence in the business pipeline to seek the authority to issue further equity to bridge the funding gap to profitability.”
Versarien, meanwhile, said that without additional funding and in the absence of a sale, it will have limited cash resources – noting that as of 19 December it had £420,000 of cash, and £120,000 available to draw from an invoice finance facility.
It gave investors an indicative view of its financial performance for the 12 months ended 30 September, in which revenue totalled £5.45 million (versus £11.1 million in the prior year) and it expects to report an adjusted earnings loss of £3.03 million (£2.4 million in 2022). The results, to be reported in February, are expected to include some £7.5 million of asset impairments.
Capital re-organisation and raise
Versarien noted that the nominal value of its equity is 0.1p per share (and in London it closed Thursday’s session at 0.31p per share), and the Companies Act prevents companies issuing new shares below their nominal value.
The company said that whilst it intends to secure any further funding above the current nominal value, it “needs flexibility”.
The solution proposed by the board is to subdivide the existing shares, into one new ordinary share with a nominal value of 0.01p and one new deferred share with a nominal value of 0.09p.
“The board considers that the resolutions are in the best interests of the company and its shareholders, taken as a whole. The board unanimously recommends that the shareholders vote in favour of the resolutions, as the directors intend to do so in respect of their own beneficial holdings,” Versarien said.
In London, Versarien shares were down around 40%, changing hands at 0.18p per share amid volatile trading.