Electric Guitar's sole operating subsidiary to enter liquidation

(Sharecast News) - Electric Guitar announced on Friday that its primary operating subsidiary 3radical was set to enter creditors' voluntary liquidation (CVL) after failing to secure a buyer for its business as a going concern. The AIM-traded firm said that despite a marketing effort conducted with KRE Corporate Recovery, no offers were received for the subsidiary, which had struggled with revenue and new business generation falling significantly below expectations.

It said the decision to liquidate followed Electric Guitar's inability to provide additional funding to 3radical due to capital constraints.

Efforts to secure external investment to sustain 3radical or to advance the company's buy-and-build strategy in advertising and marketing technology proved unsuccessful.

The CVL process was expected to start following a shareholder meeting scheduled for around 23 December, with formal notices to be issued shortly.

Electric Guitar anticipated a write-off of around £1m in loans owed by 3radical.

Once the CVL was completed, the company would no longer control or operate any of its prior trading businesses, and under the AIM rules, it was expected to be reclassified as an AIM rule 15 cash shell.

As a result, Electric Guitar would need to complete a reverse takeover or seek re-admission as an investing company within six months of the CVL's effective date to avoid suspension of its shares on AIM.

The board said it was evaluating potential options, including securing financing to pursue an acquisition strategy.

However, Electric Guitar said it was facing significant financial challenges, with minimal cash reserves and known creditors of around £1m.

The company's shares remained suspended from trading pending clarification of its financial position.

Reporting by Josh White for Sharecast.com.