With the release today of the Australian government's Defence Strategic Review I wonder what impact, if any, it has for the future prospects of EOS?

While the flagged increase in Defence spending over the coming decades is a tailwind for the industry as a whole, the refocusing on the Navy and reduction in infantry vehicles for the Army is surely not positive for EOS.

I'd be keen to hear others thoughts.

This was actually announced in November, but EOS has officially confirmed the wind up of their SpaceLink venture.

"Electro Optic Systems Holdings (“EOS” or the “Company”) announces today that it has ceased investment in SpaceLink Corporation (“SpaceLink”) and commenced proceedings to wind up SpaceLink."

Thankfully no further impairments are expected to be made in relation to SpaceLink so hopefully all the skeletons are out of the closet on this one and 2023 can be a clean slate.

This announcement and decision to wind up SpaceLink also confirms they were unable to find a buyer for the SpaceLink business which is quite telling both about the state of the business and the markets appetitie for such businesses these days.

Full announcement: https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02598739-2A1413990?access_token=83ff96335c2d45a094df02a206a39ff4

Notice under section 708A(5)(e) of the Corporations Act 2001 (Cth)

EOS snuck this one in later in the day.

On 13 October 2022, the Company announced that it had entered into new financing arrangements with Washington H. Soul Pattinson and Company Limited (WHSP), a major shareholder of the Company. Under the terms of the new financing arrangements the Company agreed to issue WHSP 7,653,040 new fully paid ordinary shares in the Company (WHSP Shares) (representing 4.68% of the Company's issued capital). Following the issue of the WHSP Shares, WHSP will hold 9.95% of the issued capital of the Company. 

So not only is EOS paying a lot in interest and fees for this loan from WHSP but they've also had to cough up almost 5% of the companies capital in new shares to WHSP to get this deal over the line.

Given the poor terms of this arrangement for EOS it shows how bad a situation they must be in given they couldn't secure more favourable terms either from WHSP or another source.

Update on Financing – Further Extension

Electro Optic Systems Holdings Limited (“EOS” or “Company”) has recently made several announcements regarding financing arrangements with Washington H. Soul Pattinson and Company Limited (“WHSP”), a major shareholder of EOS.

These arrangements included an extension of the maturity date of a $35m term loan facility (“Term Facility”) provided by WHSP, to 7 October 2022, and the provision of a $20m one year Working Capital Facility (“Working Capital Facility”) from WHSP.

EOS today announces that WHSP has agreed to further extend the maturity date of the Term Facility from 7 October 2022 to 12 October 2022. The terms of Working Capital Facility remain unchanged.

The Company continues to work with WHSP on a longer-term financing structure for EOS.

EOS has appointed a new CFO, Clive Cuthell, who commenced on the 5th September.

That means they have a brand new CEO (started 1st August) and CFO, which was very much needed after the shocking performance of the last team. I'd also like to see some heads role at board level as well.

Details on the new CFO here: https://asiapacificdefencereporter.com/eos-names-new-cfo/

A bit late, but $EOS has been suspended from trading by the ASX for not releasing it's 6-monthly results by the end of August deadline.

Not a good look.

Reports in the AFR are that they're struggling to meet their cashflow needs and also trying to find a buyer for this US business.