My first nine months as CEO of Swedish Stirling have been both challenging and very exciting. The company is undergoing industrialisation, and the technology is being packaged for customers. The first major commercial contract with Glencore is about to be delivered. However, a lot has happened during the year and the quarter, which, all in all, has given me reason to reflect on our offering, and how we approach the market. In addition to the macroeconomic changes and challenges that all companies have to face, my growing understanding of the company’s business model has gradually changed my view on how the company should proceed. Some of the long-standing objectives and declarations of intent need to be revised and adapted to the new circumstances, in conjunction with a new business plan.
We’re also working hard on the company taking its next steps, and moving our focus from product development to becoming a more business and customer-orientated business. We have a unique technology and product that delivers electricity at low production costs, in an era when this is most needed. We also have very good relationships with our customers.
The board of directors decided not to carry out the planned new issue of preferential shares during the quarter due to the prevailing market conditions. The decision has both positive and negative short-term consequences which I, as CEO, must deal with. The company’s internal forecasts and production volumes will be adjusted, and the cost levels will be reduced to adapt to the new conditions.
This means that the company will no longer be able to offer energy conversion services that include the financing of an entire facility, which is very capital-intensive. Instead, the focus is going to be on selling the PWR BLOK unit devoid of infrastructure. In support of this, we have, in addition, demonstrated that our technology can perform well throughout the year, by generating and invoicing electricity to Samancor’s TC Smelter facility in South Africa.
With this in mind, we’ve decided that the company’s strategy going forwards will focus on product sales, operation, and maintenance, as well as aftermarket service. In connection with this, in addition to the ferrochrome industry, we’re also going to offer the PWR BLOK unit to more industries that have residual gases that can be burned, or waste heat that can be recovered in terms of its energy content. This gives us increased opportunities in the market.
As for our agreement with Glencore, we have in a letter of intent, dated November 9, agreed, on a non-binding basis, to negotiate certain potential changes to the original agreement between the two parties regarding an energy conversion service. Our intention is to agree on the commercial terms of a sale of up to 25 PWR BLOKs (the corresponding number of PWR BLOKs as covered by our original agreement) at Glencore’s Lion ferrochrome smelter in South Africa.
In order to support our new strategy and business model, we also need to strengthen our balance sheet, and remain a credible partner for our customers, both when the equipment is sold, and for the ensuing aftermarket. As of 9 November 2022, the board of directors has therefore announced that the company’s intention is to carry out a preferential rights issue for approximately SEK 200 million before issue costs.
We are in a good position, and the market and the potential for our solution remains promising. I’m convinced that our new business model and broader offering to more industries will enable us to achieve profitability more quickly.
Swedish Stirling AB (publ)