Tech firm collapses while parent company suspends shares
A Bristol technology company has fallen into administration just months after being acquired for £1.28m in a reverse takeover deal.
3radical – the main subsidiary of digital marketing firm Electric Guitar Plc – has instructed Paul Ellison and Christopher Errington of KRE Corporate Recovery to market its business and assets for sale.
It is hoped 3radical’s administrators will achieve a pre-packaged sale of the business and assets on a going concern basis to a successful purchaser.
This decision was made with the agreement of Electric Guitar’s board, following the “unexpected termination of its negotiations for substantial further investment”, coupled with revised trading projections by 3radical’s management that were presented to Electric Guitar’s board meeting on 26 November, and which would require “more funding than was currently available to the group”.
It comes just two days after Electric Guitar suspended its trading of shares on AIM as it seeks to clarify its financial position.
In the seven months since acquiring 3radical in May 2024, Electric Guitar has been actively working on its buy and build strategy. It successfully completed the all-share acquisition of Mymyne Ltd in August which resulted in significant synergies and cost-savings for the 3radical business.
Mymyne also brought additional IP which the group is already starting to monetise in combination with its new collaboration agreements achieved since the RTO.
However, this acquisition was achieved despite the fall in the company’s share price from soon after the RTO. Further planned acquisitions in consideration for the company’s shares have been inhibited since then as the share price has continued to decline.
The company said: “It has taken longer than expected to benefit from the fruits of such activity although this is now starting to show. Therefore, the board has been actively seeking additional capital beyond its existing resources to be able to proceed with its buy and build mission, beyond just bringing the 3radical business to profit. However, the company’s declining share price has not only inhibited its ability to pursue its buy and build mission, but has also made an equity fundraising difficult at this time.
“The board has therefore been actively engaging in discussions with prospective investors based mainly in Singapore where it has an existing presence, and believed it had secured in principle very substantial new funds last week before the most recent further decline in the Company’s share price. However, just before the board meeting on 26 November and following the recent share price decline, the board was unexpectedly informed that the prospective investors had ultimately decided not to invest in an AIM-quoted company as they considered the market insufficiently liquid, despite continuing to be interested in the company’s business in the future.
“This combination of factors led the Electric Guitar Board to conclude that, absent substantial additional funding in the short term that was not now available, 3radical’s business could not reasonably be expected to be able to pay its historic and ongoing liabilities as they fall due, despite 3radical’s management’s positive longer term outlook for the business.”
It added that the board is taking further advice and exploring its options in relation to Electric Guitar and its financial position and a further update will be provided as soon as possible.
