Malaga-based Advanced Engine Components (ACE) has been thrown a lifeline and will negotiate an extended repayment of a $3 million sales financing facility with 698 Capital Asia Pacific, a party related to ACE's major shareholder.
Malaga-based Advanced Engine Components (ACE) has been thrown a lifeline and will negotiate an extended repayment of a $3 million sales financing facility with 698 Capital Asia Pacific, a party related to ACE's major shareholder.
The sales financing facility was repayable by December 31, 2009, but the publicly-listed provider of patented electronic fuel injection and engine management technologies was unable to meet the deadline.
The amount owing under the sales financing facility and the lapsed convertible notes was more than $7 million, including accrued interest.
In an announcement to shareholders on December 31, ACE said the facility will remain outstanding as short-term loans at call with the negotiated terms to be completed by January 31.
At 698's option, the convertible notes were convertible to ACE shares at 40 cents per share or redeemable by December 31 2009.
"ACE continuously reviews its cost structure and cash flow requirements as a consequence of the effect of the global financial crisis," the company said.
"The refinancing of the 698 sales financing facility and convertible notes demonstrates the ongoing support, commitment and belief of 698, the major shareholder, in the immediate and long-term future of ACE and provides shareholders, suppliers and customers with confidence in ACE's financial capability going forward.
However, in its latest assessment of the company, auditor BDO Kendalls expressed concern over the company's ability to repay its debt, highlighting ACE had a net deficiency of more than $1.1 million.
"This condition, along with other matters...indicate the existence of a material uncertainty which may cast significant doubt about the entity's ability to continue as a going concern and therefore whether it will realise its assets and settle its liabilities in the normal course of business and at the amounts stated in the financial report," the company said.
In July 2003, 698 lodged an off-market takeover bid for Advanced and gained 65 per cent voting capital.
At the time Advanced had sales revenue of nearly $4.5 million, but suffered a net loss of more than $5 million, which was down from a $6.4 million net loss the year before.
Throughout the 2003 financial year, ACE was dependent on the continued financial support of New Tel Limited and then Lim Asia Arbitrage Fund Inc (LIM).
The company received $2.1 million in funding from Commonwealth Equity prior to the end of that financial year and was forced to increase funding by an additional $500,000.
The repayment of that loan was also extended.
The following year AEC concluded negotiations of a product development and components supply agreement with Weichai, one of China's largest manufacturers of heavy duty diesel engines.
Under the agreement, AEC will develop technology and supply components to adapt one of Weichai's heavy duty diesel engines to run on alternative fuels, using ACE's patented natural gas vehicle system technology.
The development focus is on the enormous China bus fleet market, estimated at 120,000 new vehicles a year. Industry sources have indicated that about 20,000 of these buses a year will be designed to run on alternative fuels, natural gas and LPG.
