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Rurelec PLC on Wednesday said that it might not be able to raise working capital on reasonable terms or at all, as it failed to receive any more cash from Argentina.
Rurelec is a London-based, South America-focused power producer and developer of power plants with an operational combined cycle gas.
The company reported cash in the bank on December 31 of £400,000, reflecting a lack of cash from Argentina. Without further action, this will only provide sufficient working capital until the middle of the second quarter.
Rurelec added that the macroeconomic situation in Argentina was not favourable to Energia del Sur SA, the company in which it has a majority interest. As a result, it doesn’t expect dividends from its investee in the near future.
Further, Rurelec said that it did not have shareholder authority to issue new shares. While it is currently consulting with its majority shareholder on a resolution to this issue, the company said the shareholder was ‘not minded to support such a resolution’, and was unlikely to change its opinion.
Subsequently, the company may not be able to raise working capital on reasonable terms, or at all.
In other news, Rurelec said there has been continued interest in recent months for the company’s major assets, which it is seeking to dispose.
Directors are currently in discussions to agree heads of terms with an ovserseas counterparty to dispose of its ultimate interest in EdS, which Rurelec said could resolve the uncertainty surrounding its working capital position.
Any such disposal would be conditional on shareholder approval and be accompanied by a publication of a shareholder circular.
Rurelec shares were trading 7.3% lower at 0.51 pence each in London on Wednesday afternoon.
By Holly Beveridge; Alliance News reporter
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