After announcing the completion of its rights issue to raise working capital, Prism says it will "cut its cloth according to its cash" when it comes to continued operations.
Duncan Todd, Prism`s corporate strategy director, says he`s astonished that quite as many additional applications for shares were received.
The rights issue was announced in December at 85c and the Prism share is now trading at 45c. However, 6.69% of the original shares offered in the rights issue were applied for by individuals other than the institutions that underwrote the issue.
The underwriting consortium - led by one of Prism`s original funders, Archway Technology Venture Capital Fund - injected R55 million into the company in December as an interest-free loan.
Todd says the cash has already been integrated into the company`s business to be used as working capital and to pay off creditors. It will also be used to fund continued development.
Commenting on the fall in the Prism share price, Todd says institutional investors offloaded shares between the announcement of the rights issues and the recent announcement of the company`s financial results.
Todd says there was some concern over Prism`s extended debtors position, and even though he believes that most of the cash on the debtors book is collectable, it has placed a strain on the company`s cash resources.
Commenting on accusations that Prism`s growth is partly to blame for the company`s current cash-strapped position, Todd says its 300% per annum international growth may have been too much for the local investment community`s appetite, but global players have received the growth far more favourably.
Todd says its current position will force the company to "cut its cloth according to its cash" and a more subdued growth strategy for the next year can be expected.
Related stories:
Prism share volatile after poor results
Share
Editorial contacts