There is an absolute massive amount of “roona” (RONA) coming in right now, pouring out of every secret door and window.
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I would think that Summa needs approximately €25 million in cash practically immediately, and possibly more later on. The NATO order is great news, but it does not automatically solve the liquidity crisis. My guess is that significant positive cash flow would only be visible by 2027–2028, at which point rescue funding would no longer be needed; it could even take longer.
For this reason, I believe Summa should now focus on protecting its viable business operations. Lännen Tractors and Uudenkaupungin Työvene appear, at least from the outside, to be units with real industrial value. The group structure is currently so messy and the financial situation so tight that restructuring or some other arrangement is only a matter of time.
For Lännen Tractors, this NATO order is the most important turning point in years. At the same time, I still maintain that Lännen Tractors has never been a particularly natural fit for a listed company. It is a relatively small machinery manufacturer involved in project-based business, where individual orders carry enormous weight. If this order were lost for one reason or another, the consequences for the unit’s future could be severe. Therefore, securing the order is also important from the perspective of jobs and industrial expertise.
Summa would have needed a significantly stronger cash position right from the start. In hindsight, the arrangement of entering the stock market through the back door looks like one of those mistakes that people perhaps don’t want to admit out loud. The CEO, who was brought in on short notice, is an enterprising man; hopefully, he’ll be able to get some sleep once this saga is over.
For the shareholder, this will result in burnt fingers.
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Länkkärit has already been taken through bankruptcy once before. Currently, revenue is dropping by a quarter annually, and the impressive figure at the bottom line has the wrong sign:
The equity ratio is also deep in the red, bills are paid whenever they can be paid, etc.
When I consider the newly appointed CEO and his merits, I can’t really reach any other conclusion than that at this stage, the plan is to offer Summa a coup de grâce. And the old management didn’t want to get their hands too dirty in the process.
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That’s how it seems to be. An order could be a turning point (and even that is no guarantee) for this tractor company and its problems, but someone capable and well-resourced would need to be a partner.
I don’t see any investment value in Summa anyway, even if I tried to value just the tractors from it + the NATO option.
Someone could buy this out of Summa for a few euros, with the debts becoming the buyer’s responsibility, and keep production running.
Summa’s equation just can’t work…
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Based on my gut feeling, I would say that no one wants to take on the old debts; instead, they will only buy the business operations, and even then, only after Summa’s bankruptcy when it can be acquired at a suitable price.
Hopefully, a good home is found for Länkkäri. Despite its current earnings performance, it is a legendary brand, and my own heart beats strongly for it. I would buy it out myself if I were a big shot with deep pockets.
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This seems just as distant as the one-euro share price predicted on the Nordnet forum last summer. Which was predicted, mind you, before the 100:1 reverse split.
One can certainly fill discussion boards with messages predicting a 60% price surge for the coming week without any basis, and try to make people believe that a bankruptcy-prone shop is worth 50 million euros.
It would be interesting to hear the reasoning behind even these silly opinions. Now that Intlog, which I considered Summa’s highest-quality company, has also turned into a loss-making enterprise, its potential sale value has undoubtedly dropped significantly from before. The most valuable part of the company is Uudenkaupungin Työvene. The rest is worthless or insignificant clutter in the grand scheme of things. Based on that, one can start considering the value of a poorly managed company prone to bankruptcy and living in a financial crisis, which messes up roughly every possible thing and whose assets are mostly goodwill fluff.
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Group contributions (konserniavustus) are indeed used in Finland. However, I don’t understand how group contributions relate to this Summa situation.
The decimal point is in the wrong place regarding IntLog’s orders and deliveries for them to explain Summa’s current valuation in any way. IntLog’s executive management might be willing to buy the company back for a few grand…
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I’m not trying to make anyone believe that a tractor company is worth 50m ;D
If they paid approx. €11-14m at some point (apparently in shares and through dilution) when Lännen became a subsidiary of Summa, and looking there, Summa’s debts are €7.5m (most of it seems to be Lännen’s debt, though it’s not at all transparent in the financial statements). The NATO order is just a kind of option through which Lännen could somehow exit the corporate cluster. The company’s value is mainly local to a small municipality. There are many unlisted machinery manufacturers in Finland that have undergone restructuring. Lännen’s history spans 40 years; it has seen all kinds of economic cycles. If the workshop survives, good for them—and are they perhaps the only excavator manufacturer in Finland?
I’m just comparing something familiar from that pile: whether Summa is even able to finance the inventory capacity replenishment needed for the tractor business to process the order—in my opinion, they can’t.
The financial statements show nearly €16M in capitalized development costs. It’s difficult from the outside to estimate how much of that relates to drones, LightSpace, or other “secret” development projects, but in any case, it is a significant sum.
Finland is plagued by the Russian bogeyman, and Summa is apparently trying to chase technology that becomes obsolete in a few months on the front line. If Russia and Ukraine make peace, there will be no demand for these, so Summa may have oversized its “secret projects.” And if you believe researcher Justin Bronk, he directly advises against acquiring drones ( ”Älkää hankkiko drooneja” – Tutkija tyrmää yleisen uskomuksen | Tivi ).
The execution of these secret projects is draining the cash reserves and only threatens to push these industrial businesses—which were profitable even before Summa—into such a deep squat that will they even rise again?
In my opinion, the CEO is left with only a few options for this week before the whole of Summa is in an uncontrollable cash crisis (unless it already is). Start restructuring and freeze development projects to protect the viable industrial companies. Bankruptcy is the consequence if restructuring or any other arrangement is no longer successful.
The dream of a €500m turnover is over.
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It should probably be noted here that no one has actually seen Summa’s secret factories, which is to say, quite frankly, they don’t exist and have never existed. As for the drones, there is barely any evidence beyond a few photos—nothing concrete.
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- Authorizing the Board of Directors to decide on a rights issue
The Board of Directors proposes that the Annual General Meeting authorizes the Board to decide on a share issue for consideration in accordance with the shareholders’ pre-emptive subscription rights (rights issue) in one or more installments, such that a maximum of 3,000,000,000 new shares in the company may be issued under the authorization.
The high maximum amount of the authorization is based on the fact that the final subscription price of the shares will only be determined later, and the company wants to ensure sufficient room for maneuver to implement the rights issue in all market conditions."
From the notice to the General Meeting, looks like a rights issue is coming up.
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An authorization is just an authorization. But who actually believes that the company could pull off a share issue when it’s on the brink of bankruptcy, the business is bleeding cash (producing cod), and there is no turnaround in sight.
It is great, however, that there is enough money for board remunerations. They are at the same level as, for example, Olvi’s and clearly higher than those of many profitable companies that would serve as more suitable benchmarks than the aforementioned.
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The biggest problem with organizing a share issue, in my opinion, is where to find investors for it. When Summa Defence entered the stock exchange via a reverse takeover, the original owners of Summa received 88.2% of the shares, while Meriaura’s shareholders received only 11.8%. Most of Summa is still held by these original owners. I don’t believe these original owners are interested in investing any more in Summa at this stage, especially if they weren’t interested in putting their own money into it at the start. The purpose of the whole scheme seemed from the beginning to be just getting rid of these companies by taking them public under the guise of a defense company with heavy hype, and eventually selling off the holdings at a good price on the exchange. They just got too greedy here, and the whole thing collapsed at the starting blocks. If we estimate that at this stage 15-20% of Summa’s shares are held by people other than the original owners, these shareholders would need to invest 4-6 times their current holdings in the share issue to raise 25 million, which wouldn’t fund Summa’s operations for very long.
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Summa Defence Oyj (the “Company”) has today entered into a loan agreement for an EUR 8.0 million bridge financing facility with Largus Holding AB.
Largus Holding AB is a Swedish privately owned investment company controlled by Erik Salén. Largus Holding AB is part of the Salén investment circle, a Swedish family-owned investment group with a long history of entrepreneurship, active ownership, and long-term investments.
The purpose of the financing is to strengthen the Company’s short-term liquidity and working capital, and to support the stabilization of the Group’s financial structure while the Company prepares longer-term equity and debt-based financing solutions.
The loan is available for drawdown by the Company following the signing of the loan agreement. The loan bears an annual interest rate of 14 percent, the arrangement fee is 6 percent of the loan principal, and the loan matures on July 3, 2026. The Company may repay the loan before its maturity date, in which case a fee of 10 percent will be charged on the loan principal repaid before maturity.
The loan agreement includes certain covenants related to, among other things, the use of loan proceeds and future issuances of financial instruments.
The bridge financing is structured so that it can be converted into a convertible loan. Provided that the Annual General Meeting to be held on June 24 approves the necessary authorization for the Company’s Board of Directors, the parties reach an agreement on the matter, and the applicable corporate and regulatory requirements are met, the loan, accrued interest, and arrangement fee may be converted into convertible bonds or otherwise offset against shares at a subscription or conversion price of EUR 0.20 per share. If the loan is converted into a convertible loan, it would mature on approximately March 31, 2027.
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In my opinion, the loan terms are absolutely terrible for the company; on the other hand, it’s unlikely anyone would lend to the company on better terms given its current situation.
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Pardon my French, but a 480,000 arrangement fee 
. The interest rate is also close to something you’d see on a payday loan. Juippi did make a good point there, that who would even lend to them on better terms anyway. Then when the loan is paid back, there’s probably another fee in the range of 500,000 for the financier 
. Wonderfully expensive… I’m mostly following this meme stock for its entertainment value.
From what I can say about normal corporate loans, depending on the loan principal, fees usually range between 0.5-2% of the principal.
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10% fee if paid before the due date.
I wonder if any collateral has been provided? I’m not sure what it would be, though…
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At the same time Summa agreed on €8 million in bridge financing, a proposal is being made to the General Meeting to authorize the issuance of up to 3 billion new shares.
I don’t know if the intention is to counter the influence of a potential new major shareholder or simply to prepare for future funding rounds, but at the very least, the board seems to want every possible tool at its disposal to avoid restructuring and the freezing of “secret” projects.
Another observation is that the outside investor is willing to commit capital on terms that effectively anchor Summa’s valuation at around the €0.20 per share level.
As an added twist, a party will enter through a massive directed issue to fund the missing €15m. Then, they will try to build the remaining cash reserves through subscription rights (merkkioikeudet).
Massive dilution is coming one way or another. Lännen and the other industrial firms will likely get new owners in a year or two. Summa will probably remain on the stock exchange with its drone factory.
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Here are two more shocks for me. First, I was truly surprised and confused that a financier was found at all. I was genuinely baffled. Then I read the loan terms, and I was even more shocked—but in the other direction, that the company had to agree to such terms in the first place. I wouldn’t be able to choose between the plague and cholera here. And of course, there is a possibility that the cure is NOT worse than the disease… But it’s quite a package indeed and well reflects the lender’s perceived risk levels.
Well, we keep pushing forward again; let’s see what the cash situation looks like after the holidays :).
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