Defence, space and communications manufacturer Electro Optic Systems has come to an agreement with major shareholder Washington H. Soul Pattinson that secure its immediate financial future.
The Canberra company, whose share price has plunged as it faces a massive need for capital, confirmed a previously announced one-year, $20 million working capital facility from the diversified investment house.
It has now secured from WHSP a three-year $35 million near-term debt facility and an additional 18 month, $15 million working capital facility.
The deal was negotiated with a $35 million debt facility hanging over the talks which had a maturity date in early October. The date was extended during negotiations.
As consideration for entering into the financing agreements, WHSP will be issued with 4.68 percent of EOS’s issued capital at no cost, taking the company’s shareholding in EOS to 9.95 percent.
EOS said in a statement: “The board approved these new debt facilities to create funding certainty, given the company’s short term debt repayment obligations.
“This funding solution will enable EOS to continue executing the programme of change that has commenced under the new CEO Dr Andreas Schwer, to ensure EOS is optimally positioned to develop its strategic growth potential.”
EOS said it was continuing to seek strategic investors for its SpaceLink business which plans a network of mid-altitude communications relay satellites.
While SpaceLink is increasingly been seen in the US as a potential part of the country’s strategic space planning, it requires large capital funding.
The company said: “In the event that funding from strategic investors is not secured before the end of 2022, EOS intends to cease further investment in SpaceLink.”
EOS also said that it has been approached by ‘several parties’ about potential strategic growth partnerships, including for its core defence and space businesses.
It has initiated a process to assess proposals arising from the approaches.
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Picture: Electro Optic Systems