The seismic company Electromagnetic Geoservices has struggled for years and fell like a rock on the stock market. Now Mexican banking problems come to the fore.
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Fifteen years later, it does not look as bright for the company, which today is dominated by investors Kristian Siem and Frederik W. Mohn. The stock first collapsed in the years after the listing in 2007, then again in the oil price crisis that started in 2014.
Of all things, banking problems in Mexico now come on top of it all.
The Mexican authorities have recently withdrawn the license of Accendo Banco, partly due to insufficient capital, and begun a compulsory liquidation of the business.
Must take a write-down
The problem for EMGS is that the company had 2.1 million dollars in this bank, which is equivalent to approximately 18 million kroner. They are no longer available, EMGS states in a stock exchange announcement on Thursday morning. And although the company expects to get back some of the amount, it is uncertain how much. Therefore, almost the entire amount will be written down, it is stated in the message.
The sum may sound trivial to a listed company, but actually amounts to 12 percent of EMGS ‘cash at the end of September . This also corresponds to just over eight percent of the company’s total turnover in 2020.
EMGS recently bought back four million dollars of a convertible bond loan, which now has 28.5 million dollars outstanding. It falls due in 2023. One of the requirements from the creditors is that the company must at all times have 2.5 million dollars in cash available.
The EMGS share fell close to four percent when Børsen opened on Thursday, but has now turned around and traded up six percent. The company has a market value of close to NOK 200 million.
– The management and board of EMGS work closely with the company’s advisers, including its Mexican legal adviser, to protect the company’s interests, it is stated in Thursday’s stock exchange announcement, where the company promises to update the market when it have more information.
CFO Anders Eimstad does not want to comment beyond the message.
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