Debt-laden Eftpos company seeks $5m

Photo/Kenny Rodger

Shares in debt-laden ProvencoCadmus plunged by almost 40 per cent after it announced it was urgently seeking up to $5 million in working capital.

The electronic payment technology company said it needed the short-term cash injection while it looked for long-term funding to strengthen its balance sheet.

Shares fell from 6.5c to 4.1c yesterday. Today they have fallen from 4.1c to 4c.

Chairman Rick Christie said the company had debt of $46 million and faced difficult trading conditions,

"We can see some green shoots out there ... but we're trading with very limited funding and it's quite tricky to do business in those circumstances."

In a market update yesterday, the company said it was working with bankers and seeking additional, short-term support from its shareholders. The board was considering "all options available" and hoped to release more details his week.

"The complexity and time taken to execute a capital restructuring in the current economic environment combined with weaker-than-forecast trading performance during May-July period has placed significant pressure on the resources of the business."

Long-term restructuring would require $10 million to $15 million, Christie said.

The company was talking to prospective cornerstone shareholders about meeting its short-term needs, as well as its bank, ANZ National.

"They've been pretty good up until now - but of course there are limits to how far they're wanting to go so that's why we're having to widen the net."

The company was being punished by interest costs of between $4 million and $5 million a year, Christie said.

"There are some very good signs but we're just carrying too much debt. Any margins are just being swallowed up by interest."

Provenco and Cadmus merged in May last year and for the first six months of this financial year reported an after-tax loss of $25.6 million.