9th Apr 2019 10:24
LONDON (Alliance News) - Shares in 7digital Group PLC slumped Tuesday as the firm warned it requires further funding in the near future to continue trading.
The stock was down 63%, trading at 0.40 pence a share in morning trade.
Having started a company review, 7digital is taking "a more circumspect" view of its sales pipeline, and it now believes it will need "material" equity or debt funding in the third quarter of 2019.
"The board will assess financing options for the company however, it is likely that this would entail significant dilution for shareholders," said 7digital.
7digital's new leadership team of Chief Executive John Aalbers and Chief Financial Officer Julia Hubbard were appointed in March, and Aalbers has now started a business review to come up with a new strategy.
It will no longer be giving a pre-close trading update for 2018, as it decides how to recognise the EUR4.0 million settlement received from MediaMarktSaturn in March.
The case related to Media-Saturn subsidiary Juke Entertainment GmbH's music service, with Media-Saturn having wanted to end its relationship with 7ditigal.
"The negotiations and ultimate loss of MediaMarktSaturn as a customer prior to John's arrival at the company has diverted management attention and led to disruption within the business during the first quarter as well as having a marked effect on customer sentiment," warned 7digital.
"This has slowed both adoption by new clients and payment by existing debtors. The sales strategy and execution are the board's and new management's highest priority focus in the short term."
Related Shares:
7DIG.L