ASX stocks in voluntary administration: Here are 4 that have bitten the dust recently

Nick Sundich Nick Sundich, February 27, 2024

There are a number of ASX stocks in voluntary administration right now. For varying reasons, the utopia promised by company’s management team doesn’t always eventuate and plans to get it there just don’t work out.

 

When you have ASX stocks in voluntary administration what happens?

When a company enters voluntary administration, its stocks are often suspended from trading on the stock exchange to prevent erratic price movements and protect investors while the company’s future is determined. This suspension also allows the appointed administrators to assess the company’s financial position and explore options for the company’s survival or the best return to creditors without the added pressure of stock market volatility.

Sometimes, companies emerge from voluntary administration with a new management team that will have a better chance of delivering it to the promised land (albeit sometimes a different one to the previous management’s visions). On other occasions, what might eventuate is a reverse takeover, where a private company will buy the ‘shell’ and use it to list on the ASX, it being easier than a conventional IPO. Unfortunately, there are other times when a new direction cannot be found, and the company just delists.

With that explanation out of the way, here are 4 stocks in that limbo right now.

 

4 ASX stocks in voluntary administration

 

K-Tig (ASX:KTG)

K-Tig, which entered the ASX in late 2019 through the shell of Serpentine Technologies, was an additive manufacturer. It had its own technology, developed by the CSIRO originally and improved on by the company. It boasted that the system could perform a conventional 6 hour tungsten inert gas weld in less than 3 minutes. And it offered a ‘WaaS’ model, think Software-as-a-service but Welding rather than software.

In its last quarterly report, the company told investors it boasted sales revenue of $1.1m, representing 272% growth from a quarter before. Unfortunately, it had just $353,000 in cash and so boasted it had implemented $1.9m in annualised costs savings and had identified a further $1.1m in cost savings. It told investors it remained in discussions with Graham Engineering about acquiring it and was ‘currently exploring a number of funding options to complete the transaction’. 2 weeks later, it announced the deal was not proceeding. And it entered voluntary administration just 6 days later.

 

Elmore (ASX:ELE)

Elmore was a contract processor to the mining industry offering mobile equipment, consultancy services as well as processing itself. It also had ambitions to be junior miner – yes, a miner, not an explorer – that specialised in iron magnetite. 12 months ago, it bought the Peko mine in the NT and hoped to ship from the Darwin port. Unfortunately, after a peak in iron ore prices in 2021, prices underwent a significant correction and Elmore was not able to escape.

 

Panoramic Resources (ASX:PAN)

This company met its demise due to the bear market for nickel. It was no micro-cap explorer, it was a major producer. Sadly for its shareholders, it sank into administration just prior to Christmas. Granted, nickel prices were only part of them problem, with bad machinery and bad weather also hurting the company.

Panoramic’s demise was a blow for IGO too since it held 13.7% of the failed company and had tenements surrounding it. Hey, at least its $312m bid in 2019 for the entire company wasn’t successful.

 

Bod Australia (ASX:BOD)

Bod was one of about two dozen cannabis stocks. The cannabis sector on the ASX is notorious for hype with shares surging whenever there has been a regulatory change that investors thought would open the floodgates. But almost all companies are at an R&D phase or at early-stage commercialisation and so won’t see benefit as fast as the share price surges would suggest. Bod was developing medicinal cannabis skincare products and had some products on the market in Australia, the UK, the US and Europe.

This company appointed administrators in late November. Despite receiving a $1.6m R&D tax rebate less than a week earlier, it had trouble transferring funds raised from investors outside Australia. And so that amount was only just enough to repay loans and interest it owed to Radium Capital. Even after entering administration, it announced a deal with Green Farmers to supply a minimum quantity of 4 strains of medicinal cannabis on an exclusive basis for at least the next three months. A second meeting of creditors will be held no later than March 29, by then we’ll know the company’s final fate.

 

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