StockerYale refinances loans

StockerYale was unable to meet its loan obligations to the National Bank of Canada, according the company’s annual statement filed March 31 with the Securities and Exchange Commission.

Although the Salem-based provider of photonics-based products was able to refinance the loans – which totaled more than $5 million – the company will have to find financing elsewhere by September, it reported.

The scramble for financing shows the cash-strapped company’s financially precarious position, despite having sold off its Asian operations, several older product lines and its Salem headquarters, which it is now leasing. The company has lost nearly $24 million over the last two years.

“These losses and other factors indicated that there is substantial doubt about the company’s ability to continue as a going concern,” warned StockerYale’s accountants. The company itself echoed those warnings.

“We intend to raise additional capital, but may not be able to find it on favorable terms or at all,” the statement reads. “We are currently in discussions with several potential lenders to refinance the National Bank of Canada facility. If we are unsuccessful in raising additional capital our business may not continue as a going concern.”

The company stock, which had risen above $1 for most of February, dipped below that figure the Monday following the statement’s release.

This is not the first time StockerYale has had its back to the wall. In addition to reducing its real estate holdings, it reduced its work force in one year by about 30 to 147 employees, according to the statement. The company is in the middle of a restructuring program that focuses on the specialty fiberoptics market, while jettisoning its older offerings. It has seen an increase in sales, and continues to invest substantially in research and development (spending about a fifth of its revenues on R&D last year).

Still, financing is crucial to the firm’s survival. At the end of last year, the company had $3.4 million in the bank ($400,000 less than the previous year) though that was before some of its recent sell-offs, and it has incurred substantial leasing obligations. The company was able to refinance a number of long-terms loans, though at an increased interest rate, and often with more stringent conditions.

After negotiating the extension, the National Bank of Canada bank made it clear that it would not continue the loans after September. – BOB SANDERS