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NZX's SuperLife provides 12-month $1 mln loan to Energy Mad at 15.75% interest

Wednesday 1st June 2016

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NZX's SuperLife unit, which owns 45 percent of Energy Mad, has added to its support for the unprofitable lightbulb maker with a $1 million loan facility for one year to provide working capital and fund expansion in Australia where it is tapping into state energy efficiency schemes.

The interest rate on drawn down funds will be 15.75 percent, the company said in a statement.

Australian sales jumped 82 percent to $6.2 million in the year ended March 31, while the company's annual loss narrowed to $1.3 million and it projected an operating profit for 2017.

Because of its increased focus on Australia, Energy Mad last month signed an agreement with My Eco Limited, owned by Lawrence Grant, that will manage the company's direct to consumer sales in New Zealand starting today. Grant is a former employee of Energy Mad who had been responsible for the local direct to consumer sales since 2011.

Energy Mad sells its energy-efficient LED and compact fluorescent Ecobulbs to Australian customers through state government energy efficiency schemes in Victoria, South Australia and the Australian Capital Territory.

The $1 million loan expands SuperLife's support for Energy Mad, which includes a $2.5 million convertible notes agreement dating from early 2014 and a two-year $500,000 loan facility agreed in September 2015, of which $350,000 had been drawn down as at March 31. The notes, in two tranches, pay interest of 12.5 percent and 13.5 percent, while the loan is at an annual 14 percent rate, stepping up to 15 percent if rolled over for an extra year.

Energy Mad also has a two-year A$1 million factoring facility from global debtor finance provider Scottish Pacific Business Finance over its Australian accounts receivable (for debtors less than 90 days old). The interest rate on that facility is set at 1 percent above Westpac Banking Corp's indicator lending rate, which was 8.48 percent at the time the facility was set up, according to its annual report.

Net finance costs rose to $367,887 in the year ended March 31, from $270,330 a year earlier.

The company adopted a going-concern assumption in preparing its 2016 financial statements even though it posted a net loss, had a net cash outflow from operating activities of $1.7 million and a negative net asset position of $1.38 million. That assumption was based on its cash on hand and forecast trading for 2017, which includes more profitable LED sales in Australia, lower costs and the benefits of its arrangement with My Eco.

The shares last traded at 6 cents and have jumped 50 percent this year. The stock traded at more than $1 in late 2011.

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