When is a windfall not a windfall?
As already stated here the repeated attempts by RIFC/Sevco to secure external funding have clearly ended in failure.
I had written that if there was any good news apropos the availability of finance for Sevco then we would be regaled with breathless copy in the mainstream and so it came to pass.
Moreover the announcement to the AIM today that the company was in discussions with two major shareholders about a combined £1.5million loan should also convince anyone that the previous private credit line has been entirely exhausted.
The £1.5Million will certainly come in handy and it could have several uses.
Of course, it could be used to meet the wage bill for this month which is due to be paid next week.
That would leave enough over to settle other important bills.
However, it isn’t clear what the plan is after that though.
It has been suggested to me that another use of the £1.5million, should the loan negotiations be successfully concluded, would be to fund an insolvency event.
On the face of it that makes much more sense than paying the February wage bill.
For it is only through an insolvency event that the cost base of TRFC can be tackled.
Meanwhile the fans of Sevco are being told to get a grip on reality.
Well here is something to hold onto that is very real…
Today I spoke to three financial experts who would move in the same milieu as Graham Wallace and Philip Nash.
The highly paid trio all gave me very similar answers when I asked them about this loan of £1.5 million.
They stated that it could be used to fund an administration and that, given the circumstances, was the most likely use of these monies.
Moreover the insolvency event would then be used to cut costs and turn the company around so that it was no longer loss making.
Remember the words of Graham Wallace at the inaugural AGM of RIFC in December last year.
It was all about cutting costs as the status quo wasn’t an option going forward.
Now that news shouldn’t blow anyone off their feet.