Shares of sustainable-fuels tech firm Velocys (LON:VLSV) plummeted by 56% today, following the company's announcement of a lack of binding funding agreements. The company is currently engaged in discussions for long-term financing, but it anticipates that the terms will not reflect those of its previous convertible loan notes deal.
The earlier arrangement featured a commitment from Carbon Direct Capital to invest $15 million, conditional upon meeting certain criteria such as a minimum aggregate raise of $40 million. However, this requirement has yet to be met.
This comes after Velocys outlined a fundraising strategy in May, which aimed to secure at least £32 million ($38.9 million) through various means. These included open offers, retail offers, placing, and the issuance of convertible loan notes. Despite these efforts, the absence of definitive financing agreements has cast uncertainty over the company's financial future, leading to a significant drop in its share price.
InvestingPro Insights
InvestingPro's real-time data and expert analysis offer valuable insights into Velocys' current financial situation. According to InvestingPro, Velocys has been on a declining trend in earnings per share and has been quickly burning through cash. This aligns with the company's recent struggles to secure long-term financing and the significant drop in its share price. Furthermore, InvestingPro points out that Velocys operates with a moderate level of debt, which could be a potential concern for investors considering the company's current financial instability.
InvestingPro also provides several tips that could be beneficial for potential investors. One of these tips is that Velocys' stockholders receive poor returns on book equity, which could be a red flag for those considering investing in the company. Another InvestingPro tip is that the company's valuation implies a poor free cash flow yield, which could be an indicator of the company's financial health and its ability to generate cash flow.
For more in-depth analysis and additional tips on Velocys and other companies, consider exploring the InvestingPro platform, which offers a comprehensive range of financial data and expert tips.
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