It is understood the company is on a collision course with its bankers and big insurer customers, who have had ten days to flick through AMA Group’s annual report and are worried by what they see according to the Australian Financial Review's Street Talk.
AMA Group's auditor KPMG expressed reservations about its ability to continue as a going concern. KPMG devoted 208 words to 'material uncertainty related to going concern' in its audit opinion.
AMA Group said it was compliant with its watered-down covenants as of June 30 but had obtained waivers for the upcoming September and December testing periods in light of recent business conditions. However, it has agreed with its banks to restructure its debt this side of December 31.
According to the AFR, AMA is considering various funding options, Swiss bank UBS has been assisting in running the numbers. Those options are understood to include a convertible note lifeline, which could give a cheap entry down the track in return for a capital injection.
UBS’ involvement brings back memories of October 2019, when AMA Group went to shareholders with an equity raising to acquire Suncorp’s Capital SMART. AMA Group has also taken pitches from other firms.
Alternatively, AMA Group could go to its shareholders, including the large superannuation fund, AusSuper, hoping they inject a COVID-19 recovery-type package. AFR note the Australian fund owns about a ten per cent stake and is seldom shy about stepping up to support its portfolio companies in equity raisings.
But any deal would be a far cry from its $1.19 a share raising to buy Capital SMART in October 2019. AMA Group shares closed at 42¢ on Friday.