$10m Chinese loan keeps Jetpack maker aloft
Christchurch’s cash-strapped Jetpack maker has been thrown a lifeline in the form of a loan from its Chinese majority shareholder.
Martin Aircraft Company, which is listed on the Australian stock exchange, said it received $10 million from 52 per cent shareholder KuangChi Science to continue the commercialisation of Jetpacks at its Christchurch base.
Martin Aircraft chief executive James West said it would give the company adequate resources to operate for another 12 months.
It will enable the 2017 June accounts to be prepared on a ‘‘going concern’’ basis. It should also mean an ASX trading halt of its shares for failing to produce the accounts will soon be lifted.
West said the directors had written off the value of $17.6m in intangible assets because they had been based on future cashflows, which were ‘‘subjective and highly sensitive assumptions’’.
Martin Aircraft, which has burnt through more than $50m of investors’ money, was in danger of running out of working capital to develop a commercial engine capable of running for more than 10 hours without overhaul.
The company’s shares traded at 6 cents each.
West said the company has agreed ‘‘to use its best endeavours’’ to complete another capital raising to enable it to repay the loan and any interest.
KuangChi Science will help with the capital raising.
If it is unsuccessful, KuangChi will explore alternative financing options, including converting the loan to equity to give it a larger shareholding.
Shareholder Ralf Rodl said last Martin Jetpack was destined for Chinese ownership.
In a China Daily newspaper article from mid-2016 the chief executive of KuangChi Science, Zyang Yangyang, was quoted as saying the manufacturing process would be transferred to Shenzhen in Guangdong province.
The article also claimed the company was established by five Chinese students and it had 200 orders for the machines at a price of about $300,000 each, even though the company has not achieved commercial viability yet.
The repayment date for the loan is within 12 months, or 60 days after this date whether or not a capital raising has been completed. The loan was unsecured and will be drawn down in equal instalments subject to the board of directors approval.
Interest is payable at 1.4 per cent plus a margin of 3 per cent.