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AMTE Power may well be going bust - should have had a rights issue

AMTE is down 71% this morning on the news that they could well be going bust, imminently

Update : 15 Jun 2023, 05:50 PM

AMTE Power (LON: AMTE) shares are 71% down in London this morning. The reason for this is the announcement that they may well be going bust. In fact, pretty much will go bust unless they're able to conjure up some more capital in the next four weeks. Further, if they do then the prospect of there being any recovery for investors is “uncertain”. Translated that means that bust would be bust. 

AMTE makes battery cells for specialist - ie, not mass market cars etc - applications. We might all think that what with the electric revolution this would be a wondrous business to be in. But it's entirely possible to be in the right general sector and yet not in the booming part of that sector. Exactly what is happening here. 

The announcement itself: “The Company has subsequently been in, and continues to be in, discussions with potential investors concerning raising further finance. The Company needs to conclude some form of fundraising within no less than the next four weeks.  Whilst active discussions are ongoing, there can be no certainty of the outcome of these discussions. Accordingly, in light of the Company's reducing cash position, should the Company be unable to secure additional funding, the prospects for recovery of value, if any, by shareholders would be uncertain.”

AMTE Power share price from London Stock Exchange

This is clearly not good. The people who could invest are markedly reluctant to do so. 

Two thoughts do occur to us. The first is that perhaps AMTE Power should have started organising a rights issue a few weeks back. Announcing one wouldn't have trashed the share price by more than has already happen - we guess not at least - and gaining more capital from shareholders would have solved the problem.

The other thought is that clearly all those discussions with other capital providers now start at this much lower level of the share price. Perhaps people weren't willing to invest close to the old price and perhaps they'll be happier at a price 71% lower. Of course, if they're still not happy with the idea of investing at this price then perhaps there's no hope for AMTE - other than whatever value someone would pay when buying it out of administration.

But it does seem that there's an opportunity missed here to recapitalise through the stock market itself.

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