If my understanding is correct, today's announcement changes the Inventory Financing facility (USD 6m with Challenger) such that it can be drawn at the time of purchase orders being placed, rather than against a pool of existing LIFX inventory in warehouses. Sounds like LIFX's manufacturers wanted payment upfront, which was one of the bottlenecks in supply**. So that's a positive and an endorsement from Challenger around confidence the product will be sold (and now picked up directly by LIFX's customers).
** However, there is still the residual debt financing facility provided by LIFX's manufacturer (Eastfield / Luminous) at the time of LIFX acquisition, which Buddy took over upon acqusition and this was extended from 31 May to 31 July 2020 maturity (announcement from 28 May 2020). This was USD 18m outstanding from the interim financial report, to my knowledge it has not been paid down in any portion. Obviously, the manufacturer has a lot of skin in the game in respect of Buddy succeeding, but hopefully the fact they will now get paid upfront for new purchase orders, will give them some appetite to agree a further extension (or offload to another party).
So bottom line, we are still waiting on the outcome of this acquisition refinancing, due tomorrow. If I have misunderstood and anyone knows differently, please highlight. It's not easy to follow the various facilities as they have changed over time!
BUD Price at posting:
2.9¢ Sentiment: Buy Disclosure: Held
