EXCLUSIVE: Struggling LIFX Light Manufacturer Finds Money To Pay Down Debt
Struggling IOT Company Buddy Technologies the Adelaide based manufacturer of LIFX products sold at JB Hi Fi & Harvey Norman, as well as Best Buy in the USA, have said that they have finally been able to raise funding to pay part of a debt with their Chinese manufacturers.
This is the same manufacturer who on sold components need for LIFX lighting products destine for Australian and US stores when the LIFX manufacturer were unable to pay their bills earlier this year.
The Company is repaying at $0.50 in the dollar after US finance Group PFG provided new finance.
In a statement to the ASX the business who when struggling to pay their bills mislead shareholders about their actual revenues, resulting in the business being pulled up by ASX investigators, said that they have finally refinanced their US$10m or $1.6M term debt facility and have immediately paid out part of a debt with Chinese manufacturer Eastfield with a $2.5M payment.
According to the Adelaide based Company the $2.5M payment still leaves an outstanding debt with Shenzhen Eastfield Lighting for prior supplies of close to $4M.
As part of their debt restructure program $1.75M from a new Placement and the Entitlement offer currently being made to shareholders will go to paying down the Eastfield debt.
However, it’s still uncertain whether shareholders will contribute funding due to the past activities of the business who business activities are “questionable” according to one retailer.
In a statement to the ASX the Company said that US$2.5 million raised under the Entitlement Offer will be utilised to make PFG Payments.
The Company said that If BUD does not raise sufficient funds under the Entitlement Offer to pay the remainder of the Eastfield Payment the IOT business will either issue PFG promissory notes with a face value of up to US$4.25 million (Promissory Notes) or convertible notes which are convertible into Shares, at a conversion price of A$0.025 per Share.
If BUD makes the PFG Payment in cash via proceeds from the Entitlement Offer they claim that they will have repaid nearly half of the facility $US$.8M or A$6.5 with 34 months remaining on the 40-month facility resulting in a savings of over A$600k in interest.
Interest is being charged at $12.5% with the debt maturing in 2024.
§ If PFG does not elect to convert the promissory notes prior to the maturity deed, Buddy will be required to repay PFG an amount equivalent to the principal amount and any accrued interest.
On 27 April, BUD overstatement revenues for March 2021, they also failed to mention their deb t problems or that stock had been on sold.
These admissions only came out when the ASX started an investigation into the Companies claims.
The Company claims that since the investigation they have adopted an updated business plan, including implementing various measures to continue to reduce expenses in respect to personnel, research and development and general and administrative expenditure.
On the day that they overstated revenues the business announced the suspension of manufacturing scheduling, as the Company’s allotment of a critical semiconductor component had been sold by the Shenzhen Eastfield Lighting Company.
The critical component shortage is estimated to have a net impact of 8–12-week shift in production of products destined for retailers.