The market has welcomed plans for a £10.1 million cash injection into troubled portable hotelier Snoozebox (ZZZ:AIM), sending its share price up 6% to 26.5p. We believe the risks remain elevated over its finances as today's share placing looks simply to be short-term working capital relief and cash to pay off the former chief executive officer and finance director who left earlier this month.

A placing at 24p per share will enable Snoozebox to fulfil its contracted commitment this year and in 2014. The company says the money will also 'provide the necessary fuel for growth'.

But today's money doesn't alter the fact that all is still not well within the business. Growth plans are becoming harder to achieve. We already know from a previous announcement that Snoozebox has pulled out of two events this year on account of 'inadequate profitability'. It now flags potential job cuts. Click here for our previous write-up of the company's problems.

Overseas growth plans haven't lived up to the hype created by previous chief executive Robert Breare who told Shares last year that the US, in particular, was on the verge of being the company's next region. Today Snoozebox says talks in the US, Russia, Middle East and India are 'unlikely to result in any material revenue in 2013'.

Yet there are some positive signs, particularly news that Snoozebox is in talks to introduce extra 'semi-permanent' units (i.e. those operating nearly all-year round without having to keep moving sites) at Thorpe Park and new cabins at Donington Park, Bluewater and Stoneleigh Park.

What's less encouraging is that today's placing is mainly coming from directors and existing shareholders. That means new institutional investors aren't prepared to take on the risk of a recovery story, even though they could get shares two thirds cheaper than in early 2013.

As for red flags, simply scroll to the end of the placing announcement. Snoozebox says that if today's placing isn't approved by shareholders, and no other near-term funding solution is found, then the business would have to cease trading.

Issue Date: 30 May 2013