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The axeman cometh for Woodbois as management calls GM


Woodbois LON:WBI, the AIM-listed, Guernsey-based forestry company issued notice of a General Meeting scheduled for 16th June this morning (30th May).

As previously reported, the forestry company with assets in Gabon and Mozambique was”shocked” last month when Danish lender, Sydbank pulled a USD6m facility that was USD3.1m drawn-down from its Danish subsidiary Woodbois ApS following a 1Q23 loss.

The lender withdrew the undrawn portion of the facility and demanded a repayment of the USD2.9m, mandating that Woodbois Group draw up a plan for refinancing the business and repaying the outstanding debt by the end of this month.

The company, which produces timbers and veneers for trade from its concession in the West African state of Gabon is creaking and if it doesn’t come up with a plan to deal with the outstanding debt is likely to have to stop operations.

Redesignating Woodbois nominal price

To wit, the call for a General Meeting next month, as the company wants to explore the option of quickly floating new shares to cover the debt shortfall and management, at the current time, does not have the authorisation to issue new equity at less than nominal price.

The company said in a statement this morning: “Discussions with a number of parties are progressing which may include raising funds through the issuance of shares and/or reducing or rescheduling other debts of the group. Whilst there can be no certainty that these discussions will have a positive conclusion, the directors are convening the General Meeting at this time so that the company has the flexibility to issue ordinary shares quickly if agreement is reached on the terms of an equity issue.”

The company’s share price has taken a battering since Sydbank’s action, falling below its nominal price of 1p.

Woodbois opened trading at 0.466p this morning but was down to 0.355p within the first 15 minutes of trading. The company has offered a -80.6% year-to-date return, and a -94.1% one-year return, with shares ranging between 0.22p and 6.8p over a 52-week period.  The company has a market capitalisation of GBP11.9m.

The General Meeting will propose that Woodbois’ management is allowed to re-set the nominal price of the company’s shares, and will then give it the flexibility to issue new shares. The company added: “The directors consider that the resolutions are in the best interests of shareholders and that it is vitally important to secure the future of the company, that the company has the flexibility provided by the resolutions. The directors therefore unanimously recommend that shareholders vote in favour of the resolutions.”

Shareholders to have final say

As reported Woodbois has a reasonably strong cash position, with the company previously confirming that it has USD430,000 in the bank and outstanding trade receivables of USD1.5m outstanding. However, the need to find USD2.9m in the next few weeks will really stress the company’s balance sheet and given the company had only just gone to market in March for a GBP3m fundraise by way of a conditional placing of 250,000,000 new ordinary shares of 1p each at a price of 1.2 pence per new ordinary share, the need to return to market so soon is bad optics.

However, should shareholders not vote in favour of the management’s resolutions, the future looks very dim for Woodbois as the axe is sharpened and already at the base of the trunk.

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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