Lite Access Technologies (TSXV: LTE) this afternoon announced that it has lost a major customer along with numerous contracts following a suspension of work conducted at the end of November. The suspension, which was a result of the COVID-19 pandemic, has resulted in the customer cancelling all contracts that it has in place with the company, worth millions of dollars.
The contracts, which were for the installation of fibre-to-the-premises telecommunications in Cambridge, Lowestoft, and Bury St Edmunds, England, were held with CityFibre. In total, the contracts are believed to have been valued at C$53 million, however a portion of those revenues were already recognized.
The contracts were to be fulfilled over 20-24 months on average, with the first contract having been awarded in October 2019. The most recent was awarded just in April, meaning the majority of each contract had yet to be fulfilled.
The contracts themselves were cancelled on the basis that Lite Access had committed a “repudiatory breach of its contracts” in that a suspension of work was not to occur under the terms of the agreements. Lite Access states that the termination comes despite good faith discussions with the client surround contractual challenges and operational inefficiencies. The company currently intends to “vigorously defend its position that it was not in repudiatory breach of the contracts at the time of receipt of the notices.”
For the nine-month period ended June 30, 2020, Lite Access recognized $7.92 million of its total $9.57 million in revenues as having coming from the United Kingdom, or roughly 82.8%. Its unclear based on the financial statements what portion of that income is related to the contracts in question with CityFibre.
Lite Access Technologies last traded at $0.15 on the TSX Venture, down 58.3%.
Information for this briefing was found via Sedar and Lite Access Technologies. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
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