Baltic Horizon Fund rescue: EUR 25 million would only solve immediate problems

Vitalij Šostak, co-founder of PLY Analytics, commented in a Verslo žinios article on Baltic Horizon Fund’s planned new share issue, describing it as a “lifeline” the fund is seeking from its investors.

“Essentially, it is hardly possible to interpret this issue in any other way, as no one issues offerings of this kind out of a good life – offerings whose size exceeds the entire market capitalization, around EUR 22 million, and whose price is 73% below net asset value,” noted V. Šostak. “Of course, it is not clear what the outcome of the placement will be, but the issue is truly a necessity. Perhaps only the scale was somewhat surprising.”

The commentary analyzes the fund’s financial situation, the scale of the issue, and possible scenarios. According to V. Šostak, while the new issue is a right and necessary step, it is likely to be only a temporary solution to the fund’s structural challenges, and more radical measures related to changes in the portfolio structure may be required.

The expert also emphasizes that a significant portion of the raised capital may be used not only to reduce loans but also to cover the free cash flow deficit: “looking at the cash flows, we see that operating cash flow, after interest and CAPEX, stands at negative EUR 3.8 million. It appears that part of the cushion that may be built through the new issue will have to be used to cover this operational gap.”

The full commentary is available in the Verslo žinios article: „Baltic Horizon Fund“ gelbėjimas: 25 mln. Eur išspręstų tik momentines problemas.