Tritium asks Qld government for up to $90m bailout

[jamesgo]

Tritium asks Qld government for up to $90m bailout

Brisbane fast-charging company Tritium said it was hard to secure Australian capital to help the company through its financial troubles.

www.afr.com

Embattled Brisbane fast-charging company Tritium has asked the Queensland government for an equity injection of up to $90 million as it tries to deal with its dire liquidity issues.

While the company has warned it may be forced to close its Australian factory and move its headquarters overseas to ensure its financial survival, it is understood the request to the Palaszczuk government is unlikely to be successful.

Tritium chief executive Jane Hunter said she had been in discussions with all tiers of government to try to help the company, which listed on the Nasdaq in the United States in 2021 with a “double unicorn” $2 billion valuation but now has a market capitalisation of $US38 million ($59 million).

“It’s been extremely difficult in Australia to secure sources of capital,” Ms Hunter told The Australian Financial Review.

“To keep sovereign manufacturing capability, Australia will have to put money and legislation into it because just like [funding under America’s Inflation Reduction Act], that’s the only reason people are into factories over there.”

 

[Craig 128]

As much as it would be nice to see Tritium remain in Australia, economic reality is Australia is a high cost economy.

In most OECD rankings related to manufacturing, Australia comes last. I understand Australia is the most expensive country in the OECD to manufacture on the aggregate of five different metrics and hence why manufacturing has plunged in Australia over the past two decades. Manufacturing is now only something like 6% of the workforce.

But the positive for Tritium is, if they move to any other OECD country, it will be cheaper to manufacture and hence they can increase gross margins.

In such a high cost economy, if the government chipped in any money, it would be just throwing good money after bad.

Australia's economy in terms of economic complexity ranks something like 93, behind countries like Uganda. Where Australia excels is in industries like mining and housing speculation (Finance, Insurance & Real Estate).

 

[cafz]

This seems to be more about investment cash than cost of manufacturing, which would be a downstream effect of the higher interest rates we've seen lately (this sort of contraction is exactly the kind of thing higher interest rates are designed to do).

 

[moa999]

And there's no sovereign risk from not manufacturing EV chargers like there might be for military equipment or the like.

Suspect all our petrol bowsers are imported.

And with the US plant and recent NEVI announcements would think bulk of production just in the US anyway.. but the market isn't viewing it as profitable production.. hence the share price in the toilet.

Definitely one of the cases where providing the picks and shovels (to the gold miners) hasn't worked out.

With hindsight while the SPAC gave them a great paper valuation, they didn't raise that much money as most SPAC participants redeemed, leaving them in a tough spot. Arguably listing on the ASX at a lower valuation would have given them more access to funds.

 

[PC__LoadLetter]

Perhaps if they made greater quantities of reliable products, they'd get more orders, giving them greater cash flow.

Would this bailout result in that outcome, or would it just reward and encourage corporate laziness, knowing they could just stick their cap out again in a year or two for more sweet sweet free government money?

After all the problems Tritium has caused, I'm not sure I want to see them associated with Australian manufacturing. Let them become the Americans problem.

 

[Zoltrix77]

And there's no sovereign risk from not manufacturing EV chargers like there might be for military equipment or the like.

Suspect all our petrol bowsers are imported.

And with the US plant and recent NEVI announcements would think bulk of production just in the US anyway.. but the market isn't viewing it as profitable production.. hence the share price in the toilet.

Definitely one of the cases where providing the picks and shovels (to the gold miners) hasn't worked out.

With hindsight while the SPAC gave them a great paper valuation, they didn't raise that much money as most SPAC participants redeemed, leaving them in a tough spot. Arguably listing on the ASX at a lower valuation would have given them more access to funds.

And the recent announcement of Tesla selling Superchargers to BP signals the writing on the wall in my opinion. At least with companies like ABB and KemPower its not their primary business.

It's an unfortunate story.

 

[jamesgo]

Admittedly, normally when there is a DCFC that's broken, it's normally a Tritium unit

 

[technerdx6000]

I wonder if the reliability problems are a side effect of their financial issues. Or is it the other way around?

Kind of makes sense that parts are in short supply if they are all being used in new units to drive as much cashflow as possible.

Although, maybe if reliability was higher, there wouldn't be as much loss associated with replacement parts.

 

[Chuq]

Interesting that Tritium is considering/threatening leaving, yet Kempower are setting up an Australian presence (don’t think this necessarily means manufacturing, probably an admin/sales/logistics hub).

 

[moa999]

normally when there is a DCFC that's broken, it's normally a Tritium unit

Albeit it's a bit like saying all broken down cars have four wheels given the large number of Tritium chargers vs everything else (bar Tesla off course)

What was to be the first Kempower charger in Australia - at KFC Goulburn South still isn't working months after the install.

And the UoW has only just got its Ingeteam charger working today.

 

[leonk]

What was to be the first Kempower charger in Australia - at KFC Goulburn South still isn't working months after the install.

Is there any evidence that is the chargers fault?

 

[SPadival]

They are about to get delisted on the NASDAQ because they are a penny stock now.

Tritium in danger of losing Nasdaq listing after dramatic share slump

Tritium's plunging stock has elicited a warning that it risks being delisted from Nasdaq unless it can engineer a recovery in its share price.

thedriven.io

All the best. Don't let the door hit you on the way out.

 

[cafz]

Yeah let's just go back to digging up rocks, apparently that's all we're good at in this country.

 

[Hairyman]

I wonder if part of the issue is that while they raced ahead and got great local penetration, their units were unreliable and parts hard to get. In the end they are stuck with a bunch of legacy gear that they have a hard time servicing and so people are going elsewhere for charging equipment. I don’t have experience with their newer models, but the competition has broadened and people can go elsewhere.

 

[moa999]

They are about to get delisted on the NASDAQ because they are a penny stock now.

Easy solution to fix that. 100 for 1 stock consolidation.

Another article in the AFR today with an interview with a 5% holder who says they should have closed the Qld plant some time ago.

Employs 400 at present (down from 600) btw.

Article also claims that Gilbarco Root (petrol pump company) who had 19% has been selling causing much of the share price decline.

 

[B3AU]

Yeah let's just go back to digging up rocks, apparently that's all we're good at in this country.

Sadly it seems all Australia is good for!

 

[Quickst]

I wonder if the reliability problems are a side effect of their financial issues

The Nasdaq IPO valuation of over $2B gave it a lot of cash. It had an equity value of over $1B. Unreliable from the start

Taxpayers should not bail out failing companies with poor product and poor execution.

Article from AFR

 

[SPadival]

Sadly it seems all Australia is good for!

Don't forget selling each other real estate for higher and higher prices.

 

[Craig 128]

If they owned the land the factory in Queensland was on, they could sell it to developers for apartments and make a quid. Would be "worth" more than a factory with productive output.

 

[moa999]

Nasdaq IPO valuation of over $2B gave it a lot of cash

Barely raised any money from the SPAC compared to what was planned - majority of SPAC holders redeemed and the company waived the minimum cash condition.

And a chunk of what was left was spent on the US factory.