Redeye is encouraged by today’s news that Sivers will receive approximately USD5.8m as an upfront payment due in January 2025. The payment regards the two Chips Act awards announced in October 2024, and together with the upfront payment of up to USD2.3m announced on 8 January 2025, Redeye argues the risk of an immediate capital injection, either through loans or equity, has been slightly reduced. In our research update following the Q3 report, we estimated that an upfront payment from the Chips Act would be around SEK40m and arrive in Q4. The newly announced upfront payment of cUSD5.8m corresponds to approximately SEK65m. Combined with the upfront payment of up to USD2.3m announced on 8 January, the total payment that Sivers will receive in Q1 of 2025 amounts to up to SEK91m. However, it is important to note that the Chips Act contract builds upon Sivers working with suppliers like BAE Systems, Raytheon, and Ericsson. Therefore, we assume that Sivers will need to distribute parts of the upfront payment to these suppliers sooner or later. Redeye will do a retake of its estimates in conjunction with the Q4 report, which is due in just a couple of weeks when we will hopefully receive more information about these contracts. However, we provide an updated preview ahead of the report further down.

As we have stated before, a capital injection of at least SEK125m will be needed to finance operations until break-even and to pay back Siver’s convertible debt of cSEK55m if the share price does not trade high enough above the SEK4.86 conversion rate level for the lender to want to convert the debt to shares. Additionally, Sivers has a fully utilized loan facility totaling SEK65m that is also due for payment on 30 May 2025. Due to the company’s history of successfully financing itself through debt, Redeye has previously estimated that Sivers would be able to refinance the entire facility through new loans. However, to be more conservative going forward, we increase our assumptions of the capital injection needed by SEK65m, putting our new estimate for a capital raise at SEK190m. The new estimate is incorporated into our updated fair value range.

As we have highlighted in our previous update following the Q3 2024 report, a share rights issue is not the only possible way for the company to finance its operations in the future, and new loans to cover either the full amount or parts of the estimated SEK190m could be an alternative. However, as an act of caution in our updated Base Case, we presume that Sivers would raise a total of SEK190m in a share rights issue in Q2 2025, with a 20% discount to today’s share price of SEK4.4. Due to the recent share price appreciation, we judge the possibility of the company securing financing at a higher share price than our previously estimated SEK1.9 as much more likely, affecting our valuation positively due to lower estimated dilution.

Consequently, Redeye’s fair value range is raised to SEK0.8-10.2 (0.7-9.4), with a Base Case of SEK5.8 (5.4).