Australian marcoms and research group Photon is struggling to raise the necessary finance to recapitalise, and faces going out of business if it fails to renegotiate $AUD 176m worth of earn-out payments due to owners of some of its 50 agencies.
Last August, Photon – which owns research agencies The Leading Edge and Jigsaw Strategic Research – attempted to raise
$AUD 114.6m through a share offering, in order to reduce debt and to ensure the firm could fund future earn-outs.
Photon has since been suspended from the Australian Securities Exchange (ASX) stock market, as CEO Jeremy Philips attempts to raise up to $AUD 200m, in a bid to save the firm.
Media reports are speculating that an equity raising would price new discounted shares at around 25c, although online publication The Australian suggests that in order to attract finance this has now fallen to 10c, which it claims would mean issuing more than 1 billion new shares.
Agency founders who were expecting large earn-out payments have been told by Philips to expect cash payments equivalent to 35c in the dollar, and that if they leave the group or Photon goes under, they will get nothing.
Reports state that even if he can convince the owners to accept the reduced earn-outs, delayed payment and some portion in equity, Philips will have to raise new capital to pay the owners in addition to Photon’s lenders.
Web site: www.photongroup.com