Highcon restructures, receives additional funding
Published: 24 October 2023 | No comments yet
A double investment in Highcon's Beam 2C will contribute $4 million to the company's financial future
Digital converting equipment manufacturer Highcon has established a new business plan with the target to reach positive cash flow and operational profitability in 2024.
Highcon’s board of directors has approved a new business plan for the remainder of 2023 and for 2024, with the goal of bringing Highcon to positive cash flow and towards operating profitability in 2024. Integral to this plan is a major restructuring and downsizing, reducing the company’s burn rate and suspending investment in long-term projects for the next 12 months while retaining the ability to resume them in the future. Following the restructuring, Highcon’s cash burn will be reduced by $6-7 million annually.
Shlomo Nimrodi, Highcon CEO, said, ‘It hurts to release dedicated and professional co-workers. We don’t do it lightly – but, unfortunately, it is a necessary step in securing the long-term success of the company at such a challenging time. Our customer-facing functions will not be impacted in any significant way to assure continuity in our customer support, as well as supporting expected new installations in the next 6-12 months; our commitment to customers’ success is unwavering.’
The company’s three leading investors – Landa Ventures, Jerusalem Venture Partners and LR Group – have committed to jointly invest several million dollars to provide the company with its financing needs.
Hamsehabev, an Israeli turnkey contract manufacturer and long-time strategic manufacturing partner of Highcon, is also joining as an investor for the first time. Additionally, SEE is enlarging its convertible loan. The total value of the actual investment by SEE will be finalised in November following the procedural steps required to complete the fund-raising. but will not be less than $2.5 million.
When coupled with two new orders for the company’s Beam 2C platform – worth $4 million – the total effective injection to Highcon will be around $10 million.
Highcon chairman Alon Bar-Shany said, ‘The macroeconomic and investment environment have left Highcon no choice but to slow down its investments in the future and to focus on short-term business goals. I am confident that this ‘back to basics’ approach will well-position Highcon to later refocus on its future product road map.’
‘These are clearly difficult and challenging times,’ commented Hanoch Sternlicht of Hameshabev. ‘I continue to believe in Highcon and am proud to turn that belief into action by participating in this funding round.’
Benny Landa, a long-time Highcon investor and board member added, ‘My fellow shareholders and I are totally committed to Highcon and its strategic vision. We are proud to be associated with this important and innovative company.’
Off the back of the commitment of its investors, investment from customers and a collaboration with BHS Corrugated, Highcon has been able to secure a restructuring of its debts and credit facility with Bank Mizrahi Tefahot.