Utilitywise is seeking buyers. It needs £10m to fund a new strategy and renew its £25m credit facility which expires in April.
The company’s share price collapsed to around 2p on the news, giving it a market cap value of £1.7m.
The firm had been overestimating how much energy clients were likely to use when signing off contracts, effectively leading it to both overpay commission and overstate revenue. It also had to repay commissions to a supplier.
The company has since rebranded its corporate division back to EIC. The move raised eyebrows as Utilitywise acquired a company called Energy Information Centre, or EIC, in 2013 for £15.5m.
In a statement to the stock exchange the company said its new strategy includes a price comparison website, a ‘digitally-driven’ channel targeting microbusinesses, cross-selling, and ‘IoT-based intelligent building technology solutions’ for larger customers.
According to the statement: “The Board believes that driving greater revenues from the Group’s Corporate Division and entering the micro-SME market will result in profitable growth and significant cash flows for the Group in the medium term, along with offering further business services to its existing client base. However, the Group requires to make investments in the business to the value of approximately £10 million in order to execute this revised strategy.”
The company said its bank had “indicated willingness” to renew its £25m facility on the same terms, but only if it could raise the money to finance its new strategy from other sources.
Utilitywise said it had approached new and existing investors to raise the money but had not been able to garner sufficient support.
As a result, it is looking for a buyer and at this stage “is reliant upon the ongoing support of the bank”.
See details here.