PSI Group ready to give up on trying to complete the sale of SQS Security Qube System AB

Secure cash management products provider PSI Group ASA (OSE: PSI) reported quarterly operating revenues of 125 million NOK (2010: 112) for Q2 of 2011. EBITDA was 15.4 million (12.1) and cash flow from operations 4.8 million. The company expects Cash Management Retail business area to continue positive development but that it takes time to increase volume. Macroeconomic challenges pose a risk for the development. Market outlook for Retail Solutions is good. The share was up 5% on Friday.

PSI says that the 190 million SEK agreement on the divestment of business area Cash Management CIT/ATM is likely to be terminated. The agreement on the divestment was entered last February and was supposed to close in March. PSI Group ASA says that the buyer, OOO CKC in Russia, has defaulted from payment time and again. The business area will be moved back to continuing operations from Q3 onwards. Revenue and profitability of Cash Management CIT/ATM decreased dramatically in 2010 and caused PSI to miss one of its covenant requirements.

In the annual report the company said that should the divestment of Cash Management CIT / ATM via a sale of its shares in wholly owned subsidiary SQS Security Qube System AB not go through, the company would most likely raise money in a private placement in NOK 80 million range by the summer. The company did indeed try to get approval to raise money via a private placement but shareholders resisted the move. There will be an EGM next Monday to approve of a rights issue with preferential rights for existing shareholders.