Shares in drilling rig specialist Lamprell (LAM) collapsed by 25% to 51p after the firm shocked the market with the revelation that it needed a ‘critical capital reorganisation’ in order to continue operating.

Despite an improvement in revenues and positive operating earnings for the year to December, the company is running desperately short of money, reinforcing the old market adage that ‘cash is fact, everything else is opinion’.

The company admitted that ‘to fulfil its near-term working capital needs and then to meet its medium term strategic objectives, the group must complete a new funding arrangement of $120 million to $150 million by the end of Q3 2021 through debt and/or equity’.

Without this injection of outside capital, the firm said there were ‘material uncertainties relating to the going concern assumption’, meaning it couldn’t guarantee its continued existence as a business.

The firm said it was already deferring payments to its creditors in order to ‘maintain liquidity’ until it can secure outside funding.

With the appropriate resources, the firm paints a rosy picture of the outlook with a strong bid pipeline including a ‘step change’ in the growth of renewable projects as it becomes a diversified energy company suited to the ‘global energy transition’.

READ MORE ABOUT LAMPRELL HERE

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Issue Date: 29 Jun 2021