Tungsten Corporation plc (LSE: TUNG) (“Tungsten”, the “Company” or together with its subsidiaries the “Group”) today announces its intention to raise £15 million from a firm and conditional placing (together the “Placings”), via an accelerated bookbuild to enable the Company to improve its cash position and to continue with the investment required to deliver its stated strategy and long term value for shareholders
By 22 May Tungsten was ‘pleased to announce’ the completion of the placing with strong demand from institutional investors.
In addition to the Firm Placing, Tungsten announces that it has successfully placed a further 16,875,985 New Ordinary Shares (the “Conditional Placing Shares”) at the Placing Price on a non pre-emptive basis to raise up to an additional £13.5 million of gross proceeds (the “Conditional Placing”). The Conditional Placing is conditional, inter alia, on shareholder approval at a general meeting to be held on 11 June 2015
According to the RNS the cash is needed to invest in it’s network, sales and marketing, ‘operational enhancements’ and R&D. In regards to it’s network Tungsten (LSE: TUNG) had this to say from the same RNS:
During the year, 28,000 suppliers were added to the Network, while 18,000 mostly paper invoice suppliers ceased transacting over the Network as management focused on transitioning the Network away from non e-invoicing suppliers
This is interesting reading for a company that markets itself as a global electronic invoicing, analytics and financing company.
Note also that Cologny Advisors LLP reduced their position in Tungsten by 25% through it’s long/short hedge fund Camox Fund.
Here is the daily chart for your viewing pleasure:
It’s not pretty at all and it gets worse.
According to this article in the Telegraph, Edmund Truell (Vice Chairman and 17% shareholder) ‘pushed through the £15m fundraising for his digital invoicing company on Thursday to ward off a short-selling attack’ and that the placing would ‘shut out the short sellers that have targeted the company in the expectation it will run out of cash’.
The fact of the matter is that Tungsten is haemorrhaging cash:
That net decrease in cash of £34,978,000 is attributable to it’s operating losses and acquisition costs and as expected when you check the balance sheet, there’s whole load of intangibles waiting for you:
Unless and until Tungsten can turn a profit, it will remain a ‘not on your nelly’ stock here at Shares and Stock Markets.