Shares in Cuadrilla part-owner AJ Lucas have slumped almost 50% after company documents revealed it had an unpaid $40m AUS tax bill.
In a announcement to the Australian stock exchange AJ Lucas notes that a ‘funding shortfall’ together with a “significant reduction in cash flow … has resulted in the Company not being able to repay the Australian Tax Office (ATO)” (p8 of link).
Shares in AJ Lucas lost nearly 50% in value last month. Yesterday alone Lucas shares lost 20%.
The Australian company – which also recently lost an multimillion dollar contract due to a failure to pay bills on time – has been desperately trying to raise money for the last six months. On 5 September the company held an extraordinary general meeting in Perth, Australia to pitch new shares to investors.
The company ascribes it’s lack of cash to “business disruption caused by the adverse weather and difficult trading environment” (p8).
Its principal asset – UK fracker Cuadrilla Resources – has been delayed for over a year after causing earthquakes in Lancashire. Cuadrilla is AJ Lucas’ largest investment (p 147 of above link).
THe company is in a precarious position. The report (p14) notes “Failure to raise the $40 million will place (AJ Lucas) in significant financial difficulty”. AJ Lucas intended to “use surplus cash flow from operations to meet capital calls made by Cuadrilla”. If the cash call doesn’t work “may not be able to pay future cash calls made by Cuadrilla” (p14).
The company also intends to use the money to “fund further loans to or investments in…European shale gas investments.” (p22)
Lucas has a serious problem in that its biggest asset – Cuadrilla Resources – is unable to be valued. A company-hired consultant reports “(Cuadrilla’s) assets have neither been valued, nor the economic feasibility opined on by a technical expert, means these assets may have … a value either higher or lower than their historical cost and there is uncertainty as to their value” (see p14 of the report).
AJ Lucas owner Allan Campbell is due to stump up $10 million from his fund Inveraray Capital Pty Limited as part of the capital raise.