September 16, 2009 / 6:55 PM / 10 years ago

Arise C$10 mln infusion likely not enough-analysts

* Arise in financing deal with Haverstock Fund

* Needs more cash for stability, analysts say

* To pay C$275,000 deal fee in stock

OTTAWA, Sept 16 (Reuters) - Cash-strapped Arise Technologies secured much-needed breathing room with a C$10 million ($9.4 million) equity financing, but analysts say the solar technology company needs more money and better market conditions for lasting relief.

The deal provides sufficient capital to 2010, but the arrangement could dilute existing shares by up to 26 percent, estimated Dundee Capital Markets analyst Ian Tharp.

Money-losing Arise is struggling in a sector squeezed by paltry project funding and falling prices due to oversupply. Arise produces high-purity silicon and it manufactures solar cells in Germany.

Arise said it can get up to C$500,000 per draw, on an as-needed basis, through the 36-month facility with Haverstock Master Fund. Arise will pay a C$275,000 fee for the deal, in shares priced at 55 Canadian cents apiece.

Haverstock is a New York subsidiary of the NIR Group hedge fund, an alternative investment firm focused on small- and mid-sized companies.

In exchange for any cash that it draws, Arise will issue shares to Haverstock at a 6.5 percent discount to the previous five-day trading average.

Shares in the Waterloo, Ontario-based company, worth C$3.30 in late 2007, were unchanged at 33 Canadian cents on the Toronto Stock Exchange on Wednesday.

Arise, which issued details of the deal on Tuesday, first announced the financing in August. At that time, the company’s second quarter working capital deficit rose to C$27.1 million from C$11.1 million at the end of the first quarter.

“While we welcome the additional working capital; a general solar industry recovery, a strong 2010 Ontario project pipeline spurred by the Green Energy Act, and a permanent solution to its working capital woes are required before we are likely to improve our investment recommendation to something more positive than ‘market perform’,” Fraser Mackenzie analyst John Safrance said in a note on Wednesday.

Canaccord Adams analyst Sara Elford said Arise, which cannot access the equity before it gets regulatory approval, must do more to bolster its balance sheet, which has a “very high” risk.

$1=$1.07 Canadian Reporting by Susan Taylor; editing by Rob Wilson

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below