The struggling chip component maker IQE won a lifeline yesterday by announcing it had raised an extra £18m of cash - a move that should ensure its survival. At its current rate of spending, the company would have used up its existing net cash pile - estimated at about £3m - by early next year, sources said.
Drew Nelson, IQE's chief executive, insisted the £18m fund raising - which is still subject to shareholder approval - meant IQE was now fully funded.
"We're looking to get to cash break-even by the end of next year. If nothing changed - if sales didn't increase, we didn't do any more cost-cutting - this money would last us until the end of 2006," Mr Nelson said.
Since floating on the stock market in 2000, the company has raised about £90m but has suffered from extremely tough market conditions. It said yesterday, however, that it thought "recent improvements" in the semiconductor industry were likely to lead to "increased demand" for its products.
Mr Nelson said the fund raising would give customers "a large degree of confidence that IQE will be around for the long term" as well as strengthen its balance sheet and provide working capital.
Shares in IQE closed 2.5p higher at 18.75p last night.Reuse content