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Cash-strapped online bookseller Booktopia (ASX: BKG) has extended a suspension in trading of its shares for the third time this morning as it continues to seek funding to improve its liquidity, which has been hampered by a self-inflicted decline in sales to cope with the logistical challenges of moving to a new fulfilment centre.
The timing of the move to the new facility in South Strathfield could not have been worse, coinciding with an overall soft performance in the Australian book market amidst cost-of-living pressures, resignations from Booktopia's CEO David Nenke and CFO Fiona Levens, and a cash balance that was already low.
But the remaining leadership appears determined to overcome this unfortunate set of circumstances and not let the company sit on the shelf gathering dust. Founder Peter Nash and chairman Peter George stepped up into on nil priced options, effectively betting that their efforts will lead to recovery.
For a founder who was formerly CEO and at one point had been unceremoniously ousted from the position, Nash is now taking on what is perhaps the most operationally critical role for a company in need of desperate cash flow improvements - sales director.
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But to get over the hump of bringing sales back to growth and capitalising on the efficiency and productivity gains contemplated under the new fulfilment centre, Booktopia needs working capital, as well as the funds for one-off redundancy payments to some 50 staff; a move that is ultimately expected to save the online retailer money, but in the short-term requires more cash than it actually has.
On Friday, 13 June Booktopia entered a trading halt expecting to make a funding announcement the following Monday. But after the weekend it needed to extend that deadline, and it did so again last Friday, and again today.
After so many delays, the board has adjusted its expectation setting with a much longer timeline before it will have news to tell, setting a deadline for an announcement by 19 July - around five weeks after the initial pause in trading.
"The company is continuing to seek support from suppliers and existing shareholders. Due diligence has been undertaken by some of these parties and the Company is now seeking to meet the preconditions required for any funding to be made available," Booktopia stated in its ASX announcement this morning.
"The timetable for coming out of suspension is predicated on the form any potential funding takes, and the company expects it will be in a better position to advise on the viability and form of that funding by 19 July 2024.
"In its opinion, the continued trading of the Company’s securities is likely to be materially prejudicial to its ability to seek support from various parties and to obtain necessary funding."
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