Embattled vacuum retailer, Godfreys Group Limited (ASX: GFY), today released a trading update to investors following the appointment of a new CEO and Chief Financial Officer. The team has been reviewing the financial position of the business.
Concerningly, the company said, “Preliminary indications are that the Godfreys business may, without further financial support, experience cash flow challenges in early July 2018.”
However, Godfreys added, “It must be stressed that these indications are based on a high-level analysis by the new executive team, which is all that has been possible in the short time available.”
Godfreys is in discussions with its financing partner, 1918 Finance Pty Ltd.
Takeover
As we noted in April, Godfreys (GFY) Takeover: What You Need To Know, Godfreys is currently the target of a takeover offer from Arcade Finance Pty Ltd. The offer price was set at $0.32 per share, which compared to a share price of $0.21 before the offer was made.
Just yesterday Arcade had an 80% interest in Godfreys. Meaning, it needs 10% more in acceptances/votes to enforce a takeover. Arcade is an associated company of 1918 Finance.
Now what
Clearly, today’s update raises further questions about the potential for Godfreys to remain in the public markets.
Given the uncertainty in cash flow and its ability to generate profits, Godfreys management concluded, “…it would be prudent for shareholders and investors not to rely on previously published earnings guidance.”
Godfreys shares last closed at $0.33, according to Google Finance.
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