Picogiga given more time by French authorities
In a French press release, Picogiga said that it had assets of EUR 33.1 million ($33.1 million) and liabilities of EUR 44.4 million, 80% of which was in bonds. However, orders have picked up sharply in recent weeks and the company expects revenues of about EUR 1 million for December giving it a positive cash flow for the month.
The French financial authorities seem to have some confidence in Picogiga’s ability to successfully sort out its affairs. Only 3% of applicants to the authorities are granted the additional time under the “Chapter 11” style regulations.
Much of Picogiga’s outgoings have been in interest payments to bondholders. Understandably, the company is keen to see as many bondholders as possible convert their bonds to stock, thus reducing its interest payments. The company is now taking measures to persuade bondholders to convert. At a general meeting scheduled for December 12, Picogiga will seek approval to modify the terms of the bonds, lowering the interest rate from the current 4% to just 0.2%. It will also push back the bond expiry date to 2016.
Trading in Picogiga’s stock was suspended on September 23 when Belgian materials company Umicore announced that it was to acquire a stake in Picogiga. The deal would have alleviated many of the company’s financial problems, but Umicore subsequently withdrew leaving Picogiga in some difficulty (see Umicore and Picogiga deal falls through).
Trading in the company’s stock resumed on the Paris exchange on December 5. Within hours of opening the shares jumped over 80% in value from an opening price of EUR 0.5 with over 120,000 shares traded compared to a daily average volume for the stock in 2002 of 21,000. Ironically, trading was suspended under the rules of the Paris exchange, which state that dealing in a company’s stock must cease for the day if it rises by 50% in value. Picogiga’s shares resumed trading when the market opened on December 6, rising again to EUR 1.
