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Administrators of Ecofibre (ASX: EOF) have deferred the company's financial reporting until at least November while securing a critical $4.1 million funding facility from Van Diemens Land Finance Pty Ltd to maintain operations and provide a critical lifeline to the Brisbane-based medicinal cannabis company.
In a shareholder update today, KordaMentha confirmed it had applied ASIC relief provisions allowing Ecofibre to postpone its financial reporting for at least six months, with the deferral potentially extending up to 24 months depending on the outcome of the administration.
Ecofibre is also not required to hold its AGM while under external administration, with the meeting deferred until at least two months after its financial reporting obligations are reinstated.
The short-term funding agreement with Van Diemens Land Finance is structured as a six-week facility, progressively drawn as required. It carries an interest rate of 1.25 per cent per week, rising to 1.75 per cent per week if extended.
Administrators stated the funding was necessary to avoid winding up the company. Without it, Ecofibre would be unable to continue trading and the value of its assets would likely fall significantly, resulting in little or no return to creditors.
“We consider it to be in the best interest of creditors to have entered into this funding agreement,” administrators said in an ASX announcement.
“Based on our review of the company’s books and records and our discussions with management, we are satisfied that if the company did not obtain this short-term funding, then it will not have been able to continue operating and we will have no option but to recommend that the company be wound up.”
Ecofibre entered voluntary administration earlier this month following ongoing financial stress, failed asset sales and unresolved legal disputes. The group ended the March quarter with $1.3 million in cash and recorded a $2.8 million quarterly operating cash outflow.
A proposed sale of the company’s Ecofibre Genetics division fell through earlier this year. Meanwhile, debt obligations continued to mount, including restructured loans totalling $10 million owed to the Thiele Trust Fund and the Lambert Superannuation Fund.
The company has also been juggling legal issues, including claims from former chief scientific officer Dr Alex Capano and former Ecofibre Advanced Technologies president Jeff Bruner, in addition to a flagged dispute from Elixinol Wellness (ASX: EXL) relating to the 2024 sale of Ananda Food.
The administrators have applied for waivers from ASX listing rules to align reporting requirements with the ASIC relief.
Since Ecofibre’s securities remain suspended and trading is prohibited, KordaMentha says there is no risk of uninformed market activity.
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