23rd Jul 2019 14:14
(Alliance News) - Modern Water PLC on Tuesday said it is filing notices of its intention to appoint and administrator to its Modern Water Services Ltd and Surrey Aquatechnology Ltd subsidiaries.
Shares in the wastewater technology firm were down 5.5% at 1.70 pence in afternoon trade.
The notices of intention have been files as Modern Water has a "continuing shortfall in working capital". The notices mean that an interim moratorium comes into force, granting the two subsidiaries "some temporary protection from creditors and legal claims".
These subsidiaries are the principal operating subsidiaries of Modern Water's Membrane division. Modern Water itself and its other subsidiaries, such as its US Monitoring division, "are not affected by these notices of intention" and continue their normal trade.
Modern Water is continuing to seek alternative finance for its subsidiaries during the moratorium, which lasts 10 business days. The notices of intention are not considered to be administration appointments and the appointment of administrators can be cancelled in the event that no resolution is found.
On July 10, Modern Water said it was in need of more funding due to slower than expected cash slow from Membranes.
"As previously announced, the company is continuing to manage its working capital carefully with the business being funded using extended credit lines alongside increased efforts to convert debtors to cash. Whilst this may be sustainable in the short term, it is important that additional funding is secured in the near term in order to provide a sustainable basis on which to continue to operate the group. The company continues to explore options to raise additional capital," said Modern Water.
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