Highcon Systems Ltd has confirmed a cash injection by existing and new investors to make a new equity investment in the company, with restructuring of its bank loans and credit lines and the receipt of orders for two units of the Beam 2C worth $4m.
The company has a new business plan to reach positive cash flow and toward operational profitability in 2024. In addition, Highcon and BHS Corrugated have jointly confirmed a Strategic Partnership expected to have far-reaching implications for the digitalization of the corrugated packaging industry. BHS Corrugated is convinced that the incorporation of Highcon’s digital die-cutting equipment into the ‘Box Plant 2025’ strategy can serve the industry’s needs, as it moves towards greater automation and digitalization. Therefore, BHS Corrugated will support Highcon with customer leads.
“Highcon’s solutions can be a valuable building block in the digitalization and enhanced operational efficiency of the corrugated industry,” said Christian Engel, Managing Director, BHS Corrugated. “We have been impressed by Highcon, its leadership and workforce, its technology and solutions and we look forward to working closely to drive a win-win for both our companies and our customers.”
Highcon’s three leading investors, Landa Ventures, Jerusalem Venture Partners and LR Group have committed to jointly invest several million dollars to provide the company with its financing needs. Hamsehabev, a leading Israeli turnkey contract manufacturer and longtime strategic manufacturing partner of Highcon, is also joining as an investor in Highcon for the first time. Additionally, SEE (formerly Sealed Air), whose convertible loan to Highcon was announced in December 2022, is enlarging its convertible loan.
“The macroeconomic and investment environment have left Highcon no choice but to slow down its investments in the future and to focus on short term business goals. I am confident that this ‘back to basics’ approach will well-position Highcon to later re-focus on its future product road map,” said Alon Bar-Shany, Highcon Chairman.
Based on the investors’ commitments and the joint announcement with BHS Corrugated, the company was able to secure a restructuring of its debts and credit facility with Bank Mizrahi Tefahot. Together with two new orders for the Beam 2C, the total effective injection to Highcon will be around $10m.
Highcon’s Board of Directors has approved a new business plan for the remainder of 2023 and for 2024, with the goal of bringing Highcon to positive cash flow and towards operating profitability in 2024. Integral to this plan is a major restructuring and downsizing, reducing the company’s burn rate and suspending investment in long-term projects for the next 12 months while retaining the ability to resume them in the future. Following the restructuring, Highcon’s cash burn will be reduced by $6-7m annually.
Shlomo Nimrodi, CEO, comments, “It hurts to release dedicated and professional coworkers. We don’t do it lightly – but, unfortunately, it is a necessary step in securing the long-term success of the company at such a challenging time. Our customer-facing functions will not be impacted in any significant way to assure continuity in our customer support as well as supporting expected new installations in the next 6-12 months; our commitment to customers’ success is unwavering.”