Woodbois LON:WBI, the AIM-listed, Guernsey-based forestry company announced at the end of last week that it had parted ways with its CEO, David Rothschild, who also stepped down as a director. Rothschild had only been in the chair since June, when Paul Dolan left the company. Rothschild remains as an advisor.
The company subsequently consolidated its executive chairman and CEO role with Guido Theuns, a France-based former IT and finance executive taking control.
Investors in Woodbois have had a disappointing few years, with the timber producer’s shares collapsing from highs of 7.7p in 2021 to as low as 0.22p in the last year.
As previously reported, the company was holed below the waterline last April when Danish lender, Sydbank pulled a USD6m facility that was USD3.1m drawn-down from Woodbois’ Danish subsidiary Woodbois ApS following a 1Q23 loss.
However, before then the stormclouds were already gathering above the Gabonese-focussed forestry operator, with sustained losses, the issue of its loan and instability in its primary country of operations, Gabon. 2023 started positively, with revenues up year-on-year between 2021 and 2022 to USD23.1m, and gross profits up 69% to USD5.9m with margins also appreciating comfortably with timber production up y-o-y on 2021.
Woodbois new share issue
But as the calendar turned over, the mood music started to change. By March money was running low and the company placed 250 million new shares or 10% of issued share capital through Novum Securities, raising around GBP3m for working capital. A month later Woodbois had a bit of positive news when it secured a verbal agreement of a 40-year land lease for a voluntary carbon credit afforestation project from the Gabonese government. But the news was dampened by a shutdown of its sawmill operations, following inclement weather and a build-up of inventory, leading to a 57% fall in production in 1Q23 to 1,800m3 compared to 4,200m3 in 1Q22.
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Soon after news from Sydbank filtered through, which effectively wiped-out all of Woodbois’ cash. The company subsequently agreed to repay the outstanding balance of USD2.8m by the end of December, with USD145,000 bimonthly repayments. The repayments that Woodbois had to make utterly changed the company’s focus for the rest of the year, causing the forestry company to focus on cash generation and limiting the company’s flexibility to do growth-y things.
The reported end-of-year results, published in June, were encouraging, emphasising a good 2022, but 2023 was a different matter. A further subscription in June saw GBP6m raised to replace the USD6m working capital facility from Sydbank and the company announced a wider financing package, including a debt-for-equity swap of GBP1.75m.
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Military coup in Gabon
With instability in Gabon, which culminated in a military coup in August, that saw the army replace President Ali Bongo, after 55-years in the Presidential Palace, Woodbois had problems rebuilding its operations in the country. By the end of September, management was seeing a bit of clear sky, settling the bank debt issue with Sydbank, at a discount, and was looking forward to a more encouraging end-of-the-year.
The balance sheet was looking healthier and Woodbois’ working capital position had improved. However, given the bad weather, political instability and the shutdown of sawmill activities revenue, profit and earnings were all substantially down y-o-y. The company was progressing trade finance discussions on a USD3.5m facility, the closure of which would allow Woodbois to resume third-part trading following the withdrawal of previous facilities.
On a corporate basis, Woodbois appointed Axis Capital Markets as joint broker alongside Canaccord Genuity and Novum Securities. The departure of Rothschild to the backroom and promotion of Theuns, and the structural reorganisation of its business into distinct profit centres, led the company to believe, that it is at start of a new chapter, which management (and shareholders) hope augurs a turnaround in fortunes for the beleaguered logging company. Additionally, Woodbois said it was actively seeking to appoint an additional independent non-executive director to strengthen its board.
Shareholders watching Woodbois corporate restructuring
Woodbois’ identified profit centres included the sawmill division, responsible for wood processing and lumber production; the veneer factory division, focused on manufacturing and distributing veneer products; the trading department, engaged in trading Woodbois and third-party timber and related commodities; and the carbon credits projects division, dedicated to the development and management of carbon offset initiatives.
Shareholders especially will be watching how the restructuring progresses. Woodbois’ shares opened the week (8th January) at 0.856p and fell 1.9% in early trading. Over one-year the company’s shares were down 52% and over three years were down 73%. The company has a market capitalisation of GBP32.3m.
