Loan for infrastructure group as struggling economy derails turnaround plan
Energy infrastructure group, Fulcrum Utility Services, says it has struck an agreement for funding of up to £6m via a convertible loan, as it fights to tackle both cost rises and historic problems.
The Sheffield-based business, which warned in October that it expects to lose £6m in the current financial year, has entered into this facility agreement with Bayford & Co Ltd and funds managed by the Harwood Capital Management Limited Group.
Bayford and Harwood are substantial shareholders in the company. The loan is repayable on or before 1 November 2023, or at a later date if the lenders agree.
Jennifer Babington, Fulcrum chair, said: “Clearly the situation the company has found itself in is disappointing. While it was known the company had legacy operational issues, these were deeper and more longstanding than anticipated.
“This, set against a turbulent energy market and difficult economic backdrop, have created deeply challenging and unprecedented conditions for the group that could not have been predicted at the time of the fundraise in December last year.
“The facility is, however, I believe a positive demonstration of our major shareholders’ continued belief and commitment in Fulcrum and an endorsement of the future potential of the business.”
Fulcrum provides EV charging, smart meters and a range of infrastructure products through its four group companies Fulcrum, Dunamis, CDS, and Maintech Power.
Proceeds from a December 2021 fundraise had been intended to support the company’s plan to enter the smart meter infrastructure market as a Meter Asset Manager (MAP), as well as for general working capital purposes.
However, the volatility in the energy markets, and wider market issues of supply chain pressure and cost inflation in materials, have hit the profitability of the group’s core activities.
Fulcrum says its priorities shifted during the year from entering the smart meter infrastructure market, to instead focusing on protecting and improving margins in its core business.
This meant the proceeds of the fundraise have been used to repay the existing debt facility in full and for working capital purposes to support the business through its trading losses in the current difficult conditions.