BDSI to provide a $4 million lifeline to RADA

20 May, 2016

Rada sales have decreased by 34% in 2015. The private venture fund DBSI comes to the rescue

Rada sales have decreased by 34% in 2015. The private venture fund DBSI comes to the rescue

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Netanya, Israel, based Rada Electronic Industries Ltd. closed 2015 with a net loss of $6.4 million due to debt repayments and a  staggering 34% decrease in sales in 2015 to $14.8 million. Rada’s CEO Herzel Bodinger is a former IDF air force commander.

The sagging sales weren’t Rada’s only problem – the company has experienced a surge surge in operational and financial expenditures in 2015. Operational expenditures rose by 8% to $5.4 million in 2015 while financial expenditures skyrocketed by 185% to $3.6 million. As a result, the company reported an operational loss of $2.9 million (compared to a profit of $1.4 million in 2014), and a net loss of $6.4 million, compared to a net profit of 0$0.21 million in 2014. Since it was founded in 1970, Rada accumulated deficits of more than $74 million.

Rada’s stock is traded in NASDAQ’s secondary market. Its estimated market value of $5.8 million is almost insignificant following a 90% decline of its stock during the last year. The company received a warning from NASDAQ because it share price is below the required $1.0 mark for over 30 consecutive days. In April 2016 Rada received a 180 extension during which the company’s share price has to be higher than $1.0 for at least 10 days. If the company fails, it will be kicked out of NASDAQ trade.

2Fresh Money

During 2015, Rada was plagued by liquidity issues and debts, threatening its very existence. At the end of Q3 2016, Rada’s cash reserves depleted to $1.8 million. In July 2015, the company completed a financing round in which it raised $8.5 million. The funds raised where used to repay a loan made by control holders. 70% of that loan has been repaid.

Rada received a further lifeline from the DBSI capital venture fund. According to an agreement approved by Rada’s shareholders in Mai 15 2016, DBSI will purchase share in the worth of $4 million. The fund will obtain an option to buy shares for another $4 million over the next 4 years. Such a move will make DBSI Rada’s control holders. The agreement also states that Rada may obtain a $3.2 million load from DBSI in order to repay its debts to the current control holders.

“The approval of the transactions with DBSI gives our company sufficient working capital to support our current growth plans, R&D and marketing activities, that were constrained  because of our financial situation during the last few years. In addition, the new investment will reduce our out-of-pocket financial expenses in the future” commented the company.

Advanced Multi-Mission radars

Rada's RPS-42 radar system
Rada’s RPS-42 radar system

Rada’s financial difficulties do not reflect its high standing in the global defense industry. Rada is well respected for its advanced Radar systems. One of the notable sales made by the company in 2015 was that of a Mission Hemispheric Radar to the US army. The US armed forces will conduct a series of tests and might deploy the system in the future.

Rada has signed a strategic agreemnnt with Lockheed Martin’s aerospace division. . The American armaments giant chose Rada’s multi mission radar for a new weapon system in development: a high powered laser beam. Rada’s Multi-Mission radar family includes 3  variants in various sizes and ranges for air & surface surveillance addressing a wide range of threats to homeland security.

The RPS-40 detects, tracks and classifies direct and elevated threats which are fired at stationary or mobile forces. RPS-42  is optimized to detect, classify and track all types of aerial objects at altitudes from 30ft to 30,000ft within a radius of up to 30km. Among these objects are fighters, helicopters, UAVs, transport aircraft, and others while the RPS-44 provides Comprehensive Border Protection through the detection, classification and tracking of aerial and surface intruders such as slow and small aircraft, vehicles, vessels and pedestrians, at ranges of up to 40km.

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Posted in: Aerospace & Defense , Business , News

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