Pure Wafer shares hit as firm tackles its debt; VALUE OF STOCK FALLS 22.5% IN FINANCIAL RESTRUCTURING.
SHARES in Swansea-based Pure Wafer slumped yesterday, as the company announced plans to restructure its debts with a PS4.49m share placing.
The value of the stock fell by 22.5% in trading yesterday, with Pure Wafer becoming the second biggest faller on the Alternative Investment Market. The company, which is a provider of silicon wafer reclaim services for many of the world's leading semiconductor manufacturers, plans to place 114 million placing shares and a further 14 million open offer shares.
The new shares will be priced at 3.5 pence apiece - a 30% discount on Friday's closing price, and when placed, would control 44.75% of the company.
In its statement to the London Stock Exchange yesterday the company said that existing investors had indicated they were willing to put more money into the company, to reduce its debts after it had made substantial progress.
"As shown in the 2012 Accounts, revenues increased by approximately 21% from the previous year and by 44% when compared to the year ended 30 June 2010," it said. "Substantial unit cost and overhead reductions have resulted in a 9% reduction in costs compared to the prior year with a 27% reduction in total cost per unit manufactured compared to 2009 levels.
"A number of major silicon chip manufacturers have committed and commenced significant investment to increase capacity over the coming years as industry analysts are predicting solid and sustainable growth for the next three to four years in the silicon chip market, driven principally by strong demand for hand-held devices in the heavily populated emerging economies of China, India, Russia and Brazil.
"This stabilisation of the company's position and more positive outlook has prompted certain shareholders to indicate to the board that they would be prepared to subscribe for further ordinary shares in order to enable the company to significantly decrease its borrowings and improve its balance sheet and cash position."
Pure Wafer currently has $11.9m (approximately PS7.42m) of outstanding debt with five different lenders. It said that it would use the open offer to repay loans to Lloyds, GE and CIT by December 15.
The three lenders have agreed to waive redemption fees totalling $151,000 (PS94,000) and to write off 5% of the money due to them. The three loans being repaid form the part of the company's debt bearing the highest interest rates.
A fourth lender, Citizens, which is owed around $1.7m, has agreed to reduce the outstanding balance of its loan by $1m if Pure Wafer pays $950,000 and to reschedule the loan, reducing Pure Wafer's payments by $30,000 a month.
The remainder of the debt is with RBS.
Pure Wafer said that as a result of repaying the loans it expects to save $505,000 in interest in total, with its borrowings reduced to just under $6.5m (PS4m).
The company also revealed that it intends to refinance the remaining $6.5m of its debt by January 31 and is already in discussions with potential alternative lenders.
If the remainder of the debt is refinanced RBS has agreed to waive 25% of its redemption fee, while Citizens has agreed to waive its entire redemption fee and discount the amount due to it by 5%.
Pure Wafer said that as a result of the fundraising it expects its cash flow to benefit to the tune of $2.43m (around PS1.5m) a year.
The Swansea-based business which has a turnover of $35.8m and earnings before interest, tax, depreciation and amortisation of $6m is to hold a general meeting on November 14 to seek approval for the placing.
Subject to that meeting, the new shares will be admitted to trading on November 15.
Pure Wafer said as a result of repaying the loans it expects to save $505,000 in interest, with borrowings reduced to under $6.5m
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|Publication:||Western Mail (Cardiff, Wales)|
|Date:||Oct 23, 2012|
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