Energy storage developer RedT Energy (RED) announced that it has raised £940,000 via a placing of 47m ordinary shares at 2p, prompting a share price fall to 1.4p. Proceeds will fund the business through a strategic review. An open offer, meanwhile, will seek to raise up to £2.26m that will also go towards sustaining the cash-strapped Jersey outfit.
In October 2018, RedT announced that it had raised £5m from a share placing and that it would seek strategic partners to assist the business meet its growth plans. But management now believes that “there is insufficient time to finalise the discussions within the constraints imposed by the company's cash position and continuing cash requirements”.
RedT had cash reserves of £1.7m at the beginning of March 2019. Management claims that this cash, combined with at least £1.5m raised from this month’s announced placing and open offer, should fund RedT for between four and six months, depending on when it completes the sale of its US business, Camco International Group (CIG). On 22 February, RedT signed a non-binding memorandum of understanding with an undisclosed third party for the transfer of the US operation, under which an advance of $1m (£800,000) would be paid. RedT declined to reveal the identity of the purchaser, adding that the disposal is "in line with RedT’s overall group strategy to divest any of the remaining legacy Camco business activities".
A redundancy programme is under way. RedT will cut its staff by 23 per cent with a corresponding fall in payroll costs of 25 per cent. The company believes that these cuts, along with greater focus on overheads, will bring its average monthly cash spend to below £500,000.
