Down 70% in a year, ASX-listed Ovato calls in administrators

A hand holding a sign which says HELP is buried in paperwork, indicating an overload of informationA hand holding a sign which says HELP is buried in paperwork, indicating an overload of information

It is a bleak day for shareholders in Ovato Ltd (ASX: OVT) as the company makes the difficult decision to enter voluntary administration.

The appointment of administrators has followed a substantial erosion of the Ovato share price over the past year. During this time, shares in the printing solutions company have tumbled 70% as it contended with various business challenges.

Let’s take a look at what steps the company took today.

Ovato share price comes to a screeching halt

Prior to the market opening on Thursday morning, a request for Ovato shares to be suspended from quotation was made to the ASX.

Ovato also updated investors with the reasoning behind its suspension request. According to its release, the printing company has appointed Chris Hill, Ross Blakeley, and Ben Campbell of FTI Consulting to act as voluntary administrators.

The action was stated to have taken effect immediately, kicking off the voluntary administration process for ASX-listed Ovato.

Furthermore, the company told investors the catalysts for its difficult financial position were threefold. These included the effects of volatile market conditions, the increased cost of raw materials, and legacy cost issues. The appointed team will now assess the viability of the business.

What’s next for ASX-listed Ovato?

In addition to providing an overall assessment, the appointed administrators will soon move ahead with a public sale and recapitalisation process.

Moving forward, the Ovato share price will remain frozen while the company undergoes the administration process. Shareholders can expect to hear more details at a creditors’ meeting slated for early August.

The Ovato share price is down just over 70% from this time a year ago. This has coincided with the company’s revenue continuing to dwindle and operations remaining unprofitable. At the end of December 2021, Ovato reported cash levels of $9.26 million, compared to debt of $49.42 million.

The post Down 70% in a year, ASX-listed Ovato calls in administrators appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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