As the share price of Auga Group continued sliding downward, PLY Analytics co-founder Vitalij \u0160ostak commented for Verslo \u017einios on the reasons behind the price decline and the challenges the company is facing.<\/p>\n\n\n\n
According to V. \u0160ostak, with the current level of interest costs and the company\u2019s present operating performance, the company \u201chas no ability to fully meet its financial obligations.\u201d \u201cIt seems that we have reached a situation where the level of interest rates will no longer matter at all \u2013 the key issue will simply be the ability to obtain financing at all. At any cost,\u201d evaluates V. \u0160ostak.<\/p>\n\n\n\n
V. \u0160ostak notes that the company\u2019s problems could have been seen much earlier \u2013 since 2018, the company\u2019s free cash flow has been negative, and it is somewhat surprising why investors are reacting this way only now. Negative free cash flows are mainly driven by deteriorating core operating performance, rising interest expenses, the ‘freezing’ of funds in working capital, and investments in fixed assets.<\/p>\n\n\n\n
\u201cPersistently negative free cash flow has created the company\u2019s absolute dependence on external financing. With the current operating indicators, refinancing alone is clearly insufficient \u2013 additional financing is needed to continue covering the hole created by negative free cash flow,\u201d says V. \u0160ostak.<\/p>\n\n\n\n