Telit eyes growth - but admits it could breach covenants

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The company said it is eyeing double-digit growth. (Source: Getty)

Telit Communications, the Internet of Things company thrown into disarray during the summer after it was alleged chief executive Oozi Cats was in fact wanted criminal Uzi Katz, said today it is in talks with lenders over potential covenant breaches.

The Aim-listed company's shares lost almost a third of their value in August after Cats stepped down following allegations he was in fact Boston-based businessman Katz, who fled the US in 1992 after he was accused of wire fraud

Since then, the company has been forced to deny rumours it is under formal investigation by the Financial Conduct Authority (FCA) and warned earnings this year will be "materially below" previous guidance

But today it said despite its woes, revenues had climbed to $255m (£189.7m) in the nine months to the end of September, up from $238m last year. 

However, it also said it expects to incur charges of $25m this year, including $16m of non-cash writedowns of capitalised development costs and discontinued products, and $9m expenses which it said related to "addressing the challenges... the group faced during the year". 

It also said it is planning to cut costs by more than $10m next year by reducing R&D centres and cutting admin costs.

But it added that it is in "advanced discussions" with a lender to agree an advance waiver of potential breaches of covenants at the end of this year. 

“In 2018, we expect double digit revenue growth, fuelled by the important 2017 US certifications, which together with our reduced cost base will lead to a significant improvement in free cash flow generation,” said Yosi Fait, who was appointed chief executive last month

Shares fell 1.6 per cent to 155.7p in the first minutes of trading.

Read more: Telit shares tumble on "materially" lower earnings warning