Option Seeks to Raise More Cash to Strengthen Working Capital
Option NV (OPTI), the Belgian maker of wireless broadband-access devices, said it needs more money to strengthen working capital in an effort to return to profitability.
Option plans to raise at least 9 million euros ($12 million) in a sale of convertible bonds backed by a number of parties including Chief Executive Officer Jan Callewaert, the company said today in a statement. Option said in October that it needed a cash injection of at least 5 million euros before the end of 2012.
The Leuven, Belgium-based company needs the money to support the marketing of a range of new wireless products for markets such as automotive and security and surveillance after moving away from its standard products for mobile network operators. A license software agreement with Huawei Technologies Co. also ended in October, reducing software and license revenue as of the fourth quarter.
The shares rose as much as 9.7 percent to 34 cents this morning, the biggest intraday gain since Sept. 24. The stock last traded at 32 cents, or 3.2 percent higher, at 10:26 a.m. local time. The investment, further cost reductions and new product sales should return the company to profitability toward the end of 2013, Option said.
“So far, Option has been unable to prove that its strategy - focusing on value-added products, away from commoditized hardware - is successful,” Guy Sips, an analyst at KBC Securities in Brussels who recommends investors sell the stock, said today in a note. “Contract announcements over the last two years have been scarce or non-existent.”
Cost-saving efforts last quarter including shutting a facility in Augsburg, Germany, and moving the software activities to Belgium helped slow the rate at which it spent cash in the fourth quarter, Option said. The company ended the year with cash of 3.2 million euros, down from 13 million euros on June 30.
Option expects to conclude the bond sale in the first quarter and has agreed a mid-term loan facility of as much as 5 million euros with Mondo NV, controlled by Callewaert, to bridge potential cash needs until the transaction is completed.
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