How Singulus wants to get out of a tight spot

DThe listed mechanical engineering company Singulus Technologies published an invitation to an extraordinary general meeting on Wednesday evening. At the meeting on October 29, the shareholders are to decide on an emergency operation on equity, for an unusual reason: The measure is intended to prevent Singulus from falling victim to the strong economic recovery after the Corona crisis, so to speak.

Because although the company from Kahl am Main can look forward to increasing orders, the responsible auditor KPMG has so far refused to issue an audit certificate for the annual financial statements. From the auditor’s point of view, the continuation of the company is not guaranteed because there is a lack of money to pre-finance the orders, as Singulus CFO Markus Ehret explained in the magazine “Finance” at the end of August. According to the going concern principle enshrined in law, auditors are only allowed to issue a balance sheet report if they assume that the company will continue as a going concern.

In order to solve the financing problem, according to its current ad hoc announcement, Singulus is now planning a first step to reduce the capital in order to compensate for impairments and to cover other losses. For this purpose, shares are amalgamated at a ratio of 17 to 3. In a second step, the shareholders are to increase the previously reduced capital again – through a cash contribution of up to 13.6 million euros.

In the event that the existing shareholders do not fully subscribe to the new shares created by the capital increase, a financial investor is available to take over the shares. Because the participation of the investor could change control of the company, Singulus needs not only the approval of the shareholders but also the green light from the creditors of its corporate bond. Therefore, not only a general meeting but also a creditors’ meeting should take place.

When Singulus informed its shareholders about the need for a capital increase in mid-August, the company’s share price on the Frankfurt Stock Exchange slumped from just under 5 euros to 4.20 euros and fell to a low of 3.30 euros in the weeks that followed. By Thursday lunchtime, the Singulus price had fallen by more than 16 percent to around EUR 3.40 after the invitation to the Annual General Meeting the previous evening. As of August 17, almost 67 percent of the shares were in free float. The largest anchor shareholder on the specified date was a subsidiary of the Chinese state-owned company CNBM with a stake of more than 16 percent.

According to its own information, Singulus builds particularly innovative and resource-saving machines for many industries such as solar, hydrogen, semiconductor and medical technology as well as consumer goods and data storage. As was announced in mid-August, orders from the life sciences sector in particular have risen recently. The order backlog has increased to 110 million euros, and further orders are expected, for example from the solar and semiconductor sectors.

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