Clean technology developer Carbonxt Group Ltd. has agreed to a restructuring plan with its two largest shareholders to strengthen its balance sheet ahead of its Kentucky facility entering commercial production.
The company agreed to the two-stage restructuring plan with Phelbe Pty Ltd and Pure Asset Management. The plan will inject fresh capital of AU$11 million and provide a clear framework to pay down corporate debt of AU$5 million as the company’s US operations scale up.
Stage one completes immediately, with Phelbe subscribing for AU$2.0 million in new convertible notes to provide near-term working capital for commissioning activities in Kentucky.
Concurrently, Pure will subscribe for AU$1.5 million in convertible notes, which will be offset directly against its existing senior loan facility and accrued interest.
The second phase triggers upon the official commencement of Kentucky operations, defined as independent engineering certification and a US$1 million initial revenue milestone, alongside shareholder approval at an Extraordinary General Meeting (EGM) expected in August.
Once met, Pure will exercise its outstanding warrants and options, generating AU$4.97 million to slash Carbonxt’s senior debt from AU$15 million down to roughly AU$10 million.
In return, Pure has agreed to waive all financial covenants for the remaining life of the loan through to May 2027. Simultaneously, Phelbe will convert AU$2.0 million of notes to equity and exercise existing options, injecting another AU$3.4 million in cash.
Following these steps, Phelbe and Pure are expected to hold approximately 19.6 per cent and 15.7 per cent of the company, respectively.
To expedite these timelines, Carbonxt is offering a 10 per cent per annum discount incentive for early option exercises to all option holders.
Even with the discount applied, all strike prices remain above the company’s current share price of 6.8 cents per share.
Carbonxt Managing Director Warren Murphy said the capital reset aligns perfectly with the company’s operational trajectory, which currently boasts gross margins exceeding 45 per cent.
“With the Kentucky facility moving into production and our underlying business delivering stronger operating cash flow and gross margins, this is the right moment to strengthen our balance sheet,” Murphy said.
“A materially de-geared balance sheet will allow us the flexibility needed to capitalise fully on the significant opportunity in front of us.”