Company: Compleo Charging Solutions
Ticker: $COM
List: XETRA, Frankfurt
Market cap: € 6 MEUR at time of publication
Share price: € 1.12 at time of publication
Industry: Electric charging solutions
Market size: $25 Billion USD
Website: https://www.compleo-cs.com/en/
ESGFIRE comment:
About one month after Compleo’s latest Q3 earnings call the company on 19/12 2022 reports that they do not deem it likely that current talks with investors will have a positive outcome and therefore files for insolvency with insolvency proceedings in self administration.
Insolvency proceedings in self-administration offer companies the opportunity to carry out a reorganisation on their own. The management remains capable of acting, but is subject to the supervision of a court-appointed administrator.
This may either be the complete end of Compleo as we know it OR it may be the beginning of a new story. Either way it is definately is NOT the positive outcome we were hoping for short term. The shares of Compleo are currently trading at 1.12 EUR which is 84 % lower than the previous trading day.
ESGFIRE is absolutely appalled by this development. At the latest earnings report one month ago the new management team and especially CEO Jörg Lohr made investors hope that Compleo would be successfull in getting short term financing by selling part of their software division or atleast get a short term loan.
The company is to be continued unchanged by CEO Jörg Lohr and CFO Peter Hamela as part of the insolvency proceedings. “The production of charging stations continues as planned. We are aiming to press ahead with the restructuring processes that have been underway for weeks in order to secure the continued existence of the company and the preservation of jobs. We would have liked to send a different message shortly before the festive season. Unfortunately, we were not able to do so in view of the too short time window,” says Compleo CEO Jörg Lohr. But we are confident that we will get the necessary financing in the new year. It just needs a little more time,” says Lohr.
Is this realistic? Hard to tell but it does not feel meaningfull either to sell the remaining part of ESGFIRE’s position since whatever is left is an insignificant amount.
We really thought the new management team would be able to clear this storm out WITHOUT filing for insolvency. That the new management team after only about one month after the latest earnings report chooses to file for insolvency when the cash in the bank should have lasted longer is very destructive for current shareholder value.
In our opinion one reason the board may have taken the step with insolvency is to protect the remaining cash balance and have wages paid by the government for the next 3 months in order to buy more time to negotiate better terms with their counterparties.
Whatever happens now it’s clear ESGFIRE has lost a substantial amount in this financial turbulence. We are deeply disappointed in how the new management team has handled this and if the company goes bankrupt we would perhaps expect legal proceedings to follow for what responsibility current and former management team may have in this development. We are also very sad for all other investors which may have lost money in this stock.
In our opinion however there may be one last resort left to save Compleo: There may be money to salvage from the purchase of inergy from Eon. According to german corporate law if the entity which bought the entity from you files for bankruptcy within 1 year then this might trigger an action that the court can claim money back from the selling party. This is clear in german corporate law. If this last resort fails the assets of Compleo will be sold and whatever remains after debts are paid off will be paid out to current shareholders.
Lessons learned by this debacle?
1.Diversification is the key to not losing too much in one single position. No matter how convinced you are about an investment you should never risk more than you can afford to lose.
2. Management teams can never be trusted 100 % and numbers do not lie.
3. The previous management team in this company should have pulled the breaks on costs alot sooner and they should also have done a private placement long ago when the company still had a meaningful market cap.
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