Struggling vacuum cleaner retailer, Godfreys, has warned “cash flow challenges” are likely, following a preliminary financial review by new management.
New Chief Executive, John Hardy, and his recently appointed leadership team have warned investors its “prudent” to “not rely on previously published earnings guidance”.
In an ASX statement, Godfreys advise without further financial support, the retail group will likely experience “cash flow challenges in early July 2018”.
“It must be stressed that these indications are based on a high level analysis by the new executive team, which is all that has been possible in the short time available. Work is currently underway to verify this position,” Godfreys adds.
The news comes after 99-year old Co-Founder, John Johnston, achieved a controlling stake in the company last month.
The vacuum cleaner retailer has over 200 franchisee and company owned stores, and has faced several periods of falling sales and declining profits.
Since listing in 2014, the company’s share price has dropped over 90%.
Johnston’s Arcade Finance reportedly owns over 80% of Godfreys, and controls its principal financier ‘1918 Finance’.
1918 Finance has agreed to consider extending its $30 million senior debt facility, however, requires a substantial repayment proposal from Godfreys in submissions.
The company’s board is reportedly seeking advice on all options, including a rights issue, and will advise the market accordingly.
Should Arcade Finance achieve a 90% stake in Godfreys, it will proceed to acquire all outstanding shares compulsorily.
