Bust unicorn Powa will leave over £100 million in unpaid debts - and only £1 million can be recovered from the business
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New documents filed with Companies House show former management expect just £1 million to be recovered from the business, which was once valued at £1.8 billion.
That will barely dent the huge loans taken on by the business, not to mention the £14 million of trading debts, and £1 million owed to UK staff. Powa raised more than $200 million (£136 million) in debt and equity funding over 3 years.
The new documents also shed light on Powa's spending, showing the company:
- ran up debts of over £150,000 with its PR company;
- owed almost £50,000 to the Twickenham rugby stadium and Rugby's governing body;
- and ran up debts of at least £4.7 million with mobile developers.
So-called "Statement of Affairs" documents prepared by Powa's management after administrators were appointed, estimate how much the business is theoretically worth, how much money can realistically be recovered, and how much debt the company owes.
Documents have been filed for both Powa Technologies Group, the overall holding company which raised money, and UK trading company Powa Technologies Ltd, which owned the bulk of the technology and conducted business.
The document for the group company shows that, when intergroup loans and internal business are discounted, management expects £137.25 million of debts to be left unpaid. The bulk of this is made up of £64.4 million in secured loans and £67.2 million in unsecured loans from shareholders.
However, since the document was prepared in late February, Powa's biggest investor and creditor Wellington Management wrote off £42.8 million of the £70.8 million in debt it was owed in exchange for the company's key technology PowaTag. £200,000 was also recovered with the sale of PowaWeb to Greenlight Digital. That would leave debts of £89 million once the write-off and sale are taken into account.
But Powa's trading company also leaves substantial debts to partners, businesses it worked with, and employees.
Powa Technologies Ltd's Statement of Affairs suggests it will leave unpaid debts of at least £23.94 million, including £14 million of unpaid bills for companies it was trading with and £1.2 million of claims by employees. Alarm bells were first raised about Powa Technologies when employees went unpaid for months.
Taken together, the documents suggest Powa will leave lenders, employees, and businesses that worked with it at least £112.9 million out of pocket collectively.
The list of Powa's trading creditors sheds some light on what the business was spending money on:
- Office space: Powa owed a combined £3.9 million to various subsidiaries of temporary office space provider Regus around the world - from Jakarta to Milan. Staff were locked out of Regus offices in the weeks running up to Powa's collapse;
- Mobile development: Powa owed at least £4.7 million to mobile developers including Shoreditch-based agency UsTwo, Mobica, an agency based near Manchester, and Malaysian agency Technocom Systems;
- Promotional activity: The documents show debts of £48,503 owed to Twickenham Experience and the Rugby Football Union. Ascot Racecourse is owned just over £11,000 while Chester Racecourse is owed just over £8,000. Former Powa CEO Dan Wagner has told BI these costs relate to marketing activity;
- PR: Powa's press relations agency Flame PR was owed a huge £157,000 by the time Powa went under. Flame represented Powa in the UK but a source close to Flame told BI that the company's remit was extended globally in October last year.
That more or less stacks up with my analysis of what Powa likely spent all its money on.
The documents are believed to have been prepared by Powa's then CFO Steven Taylor and were signed off by Powa's former board, including founder and CEO Dan Wagner, and administrators Deloitte.
The bulk of the £1 million former management expects Deloitte to be able to recover from the business comes from selling off stock held by the company, as well as office furnishings. Tens of millions of intercompany loans from the group company to operating subsidiaries have been completely written off.
Dan Wagner, former CEO and founder of Powa, told BI: "Ascot, Chester, RFU and Twickenham were to do with promotional activities regarding PowaTag where PowaTag was used in the Stadium(s) and we sponsored marketing (leaflets, discounts, etc)."
He also argued that much of the Wellington debt, including the £67 million in unsecured shareholder loans, "should be discounted because they were investments rather than trading creditors and the two things are very different."
A spokesperson for Ascot told BI that it has written off what it is owed by Powa as bad debts. Chester Racecourse and the RFU did not respond to BI's request for comment.
Administrators Deloitte, Boston-based Wellington Management, and Flame PR all declined to comment on BI's figures.