Key points:
- Deepverge shares crashed 48% after confirming loan repayment rumours.
- Rumours were that it might be unable to make an upcoming loan payment.
- However, the firm will likely emerge stronger after it repays the loan.
The Deepverge PLC (LON: DVRG) share price crashed 48% after confirming speculation that it may not meet its debt obligations, including the upcoming £0.5 million payment. The firm is servicing a mezzanine loan facility of up to £25 million from Riverfort Global Opportunities PCC Limited and YA II PN Limited, issued on 17 March 2022.
The first payment of £0.5 million is due on 16 October 2022, and Deepverge will likely default on the same since it has not yet raised funds to make the payments. However, the company told inventors that it had agreed with the two lenders that any missed payments between now and 14 November 2022 would not be classified as a default.
Also read: Five Best Shares For Beginners To Watch In 2022.
Therefore, Deepverge has a grace period of one month, after which it has to repay the total amount it has drawn down from the loan facility in full once it executes the capital raise. The company is currently in talks with multiple institutional investors interested in owning a stake in the firm, and the investors’ roadshow is progressing well.
Deepverge shares have fallen heavily since the speculation about the potential to miss its loan payments started circulating. The company hopes today’s update will stop the massive decline in its share price. However, the market’s reaction to the press release was a significant selloff.
The company noted that it is reorganising and strengthening its board to ensure that it recruits the right people to lead the company, given the fast growth pace it has recently experienced, which is expected to continue into next year.
Deepverge is also exploring multiple strategies to meet the massive demand for its Labskin service and the fast growth of its Skin Trust Club product. As a result, the company has significant growth potential, as evidenced by the growth of its various products and services.
Therefore, despite the current financial hurdles facing Deepverge, the firm has a lot to offer its customers and investors and is likely to be much stronger once it finally repays the mezzanine debt facility and reorganises its finances.
Would I buy Deepverge shares? I would wait for the shares to bottom before buying.
*This is not investment advice.
Deepverge share price.
The Deepverge share price plunged 47.96% to trade at 2.93p, falling from Tuesday’s closing price of 5.63p.